CHAPTER

15
Reserves and Provisions

CW 1___________

Provision for Doubtful Debts a/c

Particulars Amount Particulars Amount
To Bad debts 1,200 By Balance b/d 1,800
To Balance c/d 3,600 By Profit & loss a/c 3,000
4,800 4,800

CW 2___________
Provision for Doubtful Debts a/c
Particulars Amount Particulars Amount
To Balance c/d 4,500 By Balance b/d 3,000
By Profit & loss a/c 1,500
4,500 4,500

Journal entries
Date Particulars LF Debit Rs. Credit Rs.
Profit & loss a/c Dr. 1,500
To Provision for doubtful debts a/c 1,500
(Being provision made for doubtful debts)

CW 3___________
a) Provision for doubtful debts a/c
Particulars Amount Particulars Amount
To Bad debts a/c 12,000 By Balance b/d 15,000
To Balance c/d 10,000 By profit & loss a/c 7,000
22,000 22,000

b) Journal Entries
Date Particulars LF Debit Rs. Credit Rs.
Provision for doubtful debts Dr. 12,000
To Bad debts a/c 12,000
(Being the balance of bad debts account transferred to provision

Principles of Accounting – I 140

 for doubtful debts account)
Profit & loss a/c Dr. 7,000
To provision for doubtful debts a/c 7,000
(Being provision made for doubtful debts)

c) Effect on:
Dr. Profit & Loss a/c Cr.
Particulars Amount Particulars Amount
To Bad debts 12,000
Add : New provision for doubtful debts 10,000
22,000
Less : Old provision for doubtful debts 15,000
7,000

Effect on:
Balance Sheet
Liabilities Amount Assets Amount
Sundry Debtors 2,50,000
Less : Provision for doubtful debts 10,000
2,40,000

CW 4___________
a) Provision for Doubtful Debts a/c
Particulars Amount Particulars Amount
To Bad debts 4,000 By Balance b/d 14,000
To Profit & loss a/c 6,400
To Balance c/d 3,600
14,000 14,000

b) Journal entries
Date Particulars LF Debit Rs. Credit Rs.
a) Provision for doubtful debts a/c Dr. 4,000
To Bad debts a/c 4,000
(Being the balance of bad debts account transferred to provision
for doubtful debts account)
b) Provision for doubtful debts a/c Dr. 6,400
To Profit & Loss a/c 6,400
(Being the excess of old provision for doubtful debts written back)

c) Bad Debts a/c

Particulars Amount Particulars Amount
To Sundry debtors a/c 4,000 By provisions for doubtful debts a/c 4,000

d) Effect on Final Accounts

Dr Profit & Loss a/c Cr
Particulars Amount Particulars Amount
By Provision for D/D 14,000
Less : Bad debts 4,000
10,000
Less : New provision for D/D 3,600
6,400

Balance Sheet
Liabilities Amount Assets Amount
Sundry Debtors 1,20,000
Less : Provision for D/D 3,600

141 Reserves and Provisions

 1,16,400

CW 5___________
a) Provision for Doubtful Debts a/c
Particulars Amount Particulars Amount
To Old bad debts 13,750 By Balance b/d 22,500
To New bad debts 9,500 By Profit & loss a/c 17,100
To Balance c/d 16,350
39,600 39,600

b) Journal Entries
Date Particulars LF Debit Rs. Credit Rs.
a) Provision for doubtful debts a/c Dr. 9,500
To Bad debts a/c 9,500
(Being the debtors became bad)
b) Provision for doubtful debts a/c Dr. 23,250
To Bad debts a/c 23,250
(Being the balance of bad debts account transferred to
provision for doubtful debts account)
c) Profit & loss a/c Dr 17,100
To Provision for Doubtful debts a/c 17,100
(Being provision for doubtful debts created)

c) Bad Debts a/c

Particulars Amount Particulars Amount
To Sundry debtors a/c 13,750 By Provisions for doubtful debts a/c 23,250
To Sundry debtors a/c 9,500
23,250 23,250

d) Sundry Debtors a/c

Particulars Amount Particulars Amount
To Balance b/d 2,27,500 By Bad debts 9,500
By Balance c/d 2,18,000
2,27,500 2,27,500

e)
Dr. Profit & Loss a/c Cr.
Particulars Amount Particulars Amount
To Old bad debts 13,750
Add : New bad debts 9,500
Add : New provision for doubtful debts 16,350
39,600
Less : Old provision for doubtful debts 22,500
17,100

f) Balance Sheet
Liabilities Amount Assets Amount
Sundry Debtors 2,27,500
Less : Bad debts 9,500
2,18,000
Less : Provision for Doubtful Debt 16,350
2,01,650

Principles of Accounting – I 142

HW 1___________
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Bad debts 500 By Profit & loss a/c 3,000
To Balance c/d 2,500
3,000 3,000

HW 2___________
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Profit & loss a/c 2,950 By Balance b/d 4,000
To Balance c/d 1,050
4,000 4,000

HW 3___________
a)
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Bad debts a/c 7,500 By Balance c/d 10,500
To Balance c/d 22,500 By Profit & loss a/c 19,500
30,000 30,000

b) Journal Entries
Date Particulars LF Debit Rs. Credit Rs.
Provision for doubtful debts a/c Dr. 7,500
To Bad debts a/c 7,500
(Being the balance of bad debts account transferred to provision for
doubtful debts account)
Profit & loss a/c Dr. 19,500
To Provision for bad debts a/c 19,500
(Being the provision created for doubtful debts)

c) Effect on Final Accounts

Dr. Profit & loss a/c Cr.
Particulars Amount Particulars Amount
To Bad debts 7,500
Add : New provision for bad debts 22,500
30,000
Less: Old provision for bad debts 10,500
19,500

HW 4___________
a)
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Bad debts a/c 5,000 By Balance b/d 16,000
To Profit & loss a/c 10,000
To Balance c/d 1,000
16,000 16,000

143 Reserves and Provisions

b) Journal Entries
Date Particulars LF Debit Rs. Credit Rs.
Provision for doubtful debts a/c Dr. 5,000
To Bad debts a/c 5,000
(Being the amount of bad debts written off transferred to provision for
doubtful debts a/c)
Provision for doubtful debts a/c Dr. 10,000
To Profit & loss a/c 10,000
(Being the excess of old provision for doubtful debts written back)

c)
Dr. Profit & Loss a/c Cr.
Particulars Amount Particulars Amount
By Provision for doubtful debts 16,000
Less: Bad debt 5,000
11,000
Less: New provision for doubtful debts 1,000
10,000

d) Balance Sheet
Liabilities Amount Assets Amount
Trade debtors 40,000
Less: Provision for doubtful debts 1,000
39,000

HW 5___________
a)
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Bad debts a/c 7,500 By Balance b/d 8,500
To Balance c/d 2,400 By Profit & loss a/c 1,400
9,900 9,900

b) Journal Entries
Date Particulars LF Debit Rs. Credit Rs.
Provision for doubtful debts a/c Dr. 7,500
To Bad debts a/c 7,500
(Being the balance of bad debts account transferred to provision for
doubtful debts account.)
Profit & Loss a/c Dr. 1,400
To Provision for doubtful debts a/c 1,400
(Being provision created for doubtful debts.)

c)
Dr. Bad debts a/c Cr.
Particulars Amount Particulars Amount
To Balance b/d 7,500 By provision for doubtful debts a/c 7,500
7,500 7,500

HW 6___________
a)
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Bad debts a/c (old) 7,500 By Balance b/d 11,500
To Bad debts a/c (new) 4,500 By Profit & loss a/c 6,775
To Balance c/d 6,275
18,275 18,275

Principles of Accounting – I 144

b) Journal Entries
Date Particulars LF Debit Rs. Credit Rs.
a) Bad debts a/c Dr. 4,500
To Debtors a/c 4,500
(Being the debtors became bad)
b) Provision for doubtful debts a/c Dr. 12,000
To Bad debts a/c 12,000
(Being the balance of bad debts account transferred to provision for
doubtful debts account)

c) Balance Sheet
Liabilities Amount Assets Amount
Trade debtors 1,30,000
Less: Bad debts 4,500
1,25,500
Less: Provision for doubtful debts 6,275
1,19,225

HW 7___________
a)
Dr. Provision for Doubtful Debts a/c Cr.
Particulars Amount Particulars Amount
To Bad debts a/c (old) 1,500 By Balance b/d 2,000
To Bad debts a/c (new) 1,500 By Profit & loss a/c 2,110
To Balance c/d 1,110
4,110 4,110

b)
Dr. Bad debts a/c Cr.
Particulars Amount Particulars Amount
To Sundry debtors a/c 1,500 By Provision for doubtful debts a/c 3,000
To Sundry debtors a/c 1,500
3,000 3,000

c)
Dr. Sundry debts a/c Cr.
Particulars Amount Particulars Amount
To Balance b/d 20,000 By Bad debts a/c 1,500
By Balance c/d 18,500
20,000 20,000

d) Profit & loss a/c

Particulars Amount\ Particulars Amount
To Bad debts 1,500
Add: New bad debts 1,500
Add : New provision for doubtful debts 1,110
4,110
Less: Old provision for doubtful debts 2,000
2,110

e) Balance Sheet
Liabilities Amount Assets Amount
Sundry debtors 20,000
Less: Bad debts 1,500
18,500
Less: Provision for doubtful debts 1,110
17,390

145 Reserves and Provisions

Principles of Accounting – I 146