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Credit provision

What is credit provision for bad debts? And how should it be treated? Should we subtract provision for bad debts from credit provision for bad debts , it is mentioned in the first line of the below attached photo

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lithish kumar

lithish kumar

CA Inter

3K+

25-May-20

127

Answers (6)

Credit provision for bad debts is the credit balance in the provision for bad debts account. Deduct it from Debtors balance and show debtors net.


sudha reddy

sudha reddy

Moderator

26-May-20

sudha reddy Moderator

Credit provision for bad debts is the credit balance in the provision for bad debts account. Deduct it from Debtors balance and show debtors net.

Is there any journal entry for it so I can understand more clearly


Thread Starter

lithish kumar

lithish kumar

CA Inter

3K+

26-May-20

Balance in PBD should be reduced from Debtors in the Balance sheet Creating Provision (P&L Dr. To PBD) Bad Debt written off (Bad Debt expense A./c Dr. To Debtor A/c) Amount transferred from PBD (PBD A/c Dr. To P&L A/c) Balance in PBD will be reduced from Debtors in the balance sheet


sudha reddy

sudha reddy

Moderator

26-May-20

Will credit PBD appear in credit side of P&L


Thread Starter

lithish kumar

lithish kumar

CA Inter

3K+

26-May-20

No it doesn't appear in credit side of p&l PBD means it a future expense so it appears in debit side of p&l If PBD is recovered then recovered amount will appear in credit side of p&l Journal entry PBD RECOVERED A/C DR TO P&L A/C


sai t

sai t

CA Foundation

570

26-May-20

Thread Starter

lithish kumar

Will credit PBD appear in credit side of P&L

PBD is a provision. It is reduced from Debtors in Balance sheet. If PBD balance is more than required then the excess is credited to P&L.


sudha reddy

sudha reddy

Moderator

28-May-20

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