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Provision for Discount on Debtors

This provision is created to provide for discount likely to be allowed to debtors.

 

Journal Entry:

Profit and Loss A/c         Dr.

    To Provision for discount on debtors A/c


Illustration 7

Following are the extracts from the Trial Balance of a firm as at 31st March, 2014.
 

Name of Account

Debit ( ₹ )

Credit ( ₹ )

Sundry Debtors

1,02,500

 

Bad Debts

1,500

Discount

900

  • Create a provision for doubtful debts @ 10% on debtors
  • Create a provision for discount on debtors @ 2% on debtors
  • Additional discount given to the debtors ₹ 2,500

Pass the necessary journal entries and show the relevant accounts including final accounts.
 

Solution:






 

 

 

 

 

 

 







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