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Provision for discount on debtors and provision for discount on creditors?
Wiki User
∙ 12y ago
a provision is set up to give discounts to debtors who settle accounts early. as the company are not receiving the full debt they have a provision in place in this eventuality. This is seen as an expense to the business and brings the amount the debtors down. In other words dr P&L and Cr debtors in balance sheet
Wiki User
∙ 12y ago
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Reserve for doubtful debts definition in accounting?
The reserve for bad debts is a provision set aside for debts (debtors) in the balance sheet that might not be collectable. This provision can be either specific or general: * Specific bad debt provision - a provision set aside for specific or identified individual debts considered not collectable. This provision is allowable for tax deduction * General bad debt provision - a provision set aside for non specific debts, it might be for eexample 100% of all debts over 90 days old and 50% of debts over 60 days old. It is a general provision to cover the fact if any of these debts go bad and is not an allowable deduction for tax purposes
Difference between provision for doubtful debt and bad debt?
Bad debts is a sure loss, irrecoverable on a given date and is written off from the trade debtors. an over aged debtors usually turn out to be bad debtors. provision for doubtful debts is created based on estimation that the certain percentage of debtors may turn out to be doubtful debts. a percentage is worked out based on the debtor's collection period and general economic environment.
Prepare Debtors control account and Creditors control account?
The financial year of Ali & Co is closed on June 30, 2007. Data regarding Ali & Co isgiven below:Rs.Opening balanceDebtors 75,000Creditors 125,000Closing balanceDebtors 100,000Creditors 150,000SalesCash 100,000Credit 130,000PurchasesCash 80,000Credit 100,000Purchase returns (From credit purchases) 5,000Receipts from debtors ? 88500Payments to creditors ? 65000Discount allowed 2,000Discount received 5,000Bad debts written off 13,000Increase in provision for doubtful debts 2,500Required:Prepare Debtors control account and Creditors control account.
Is provisions for bad debts nominal account?
yeah may be because provision for doubtful debt is a reserve which has been created against the debtors which is an estimated loss and also the journal entry is [Debit] Provision for bad and doubtful debts a/c [Credit] Debtors a/c and here this loss is debited and hence it can be treated as nominal a/c but while preparing trial balance it has a credit balance as its a liability
Format for Debtors control account and creditors control account?
debtors
What is Journal entry for provision for debtors?
No entry for opening debtors these are just transferred from previous period to current period.
How do you calculate new provision for doubtful debts?
In the P and L A/C calculate the percentage mentioned for provision for doubtful debts on sundry debtors and write the amount. This will be your new provision
Is provision for doubtful debt subtracted from debtors in the balance sheet?
Yes it is.
Difference between provision for bad debt and reserve for bad debt?
Provisions and Reserves are the amount setaside out of profits. When the amount is set aside for a particular purpose it is called a provison. Examples for this is Provision for Baddebts and provision for Depreciation and Provision for Discounts on Debtors. when the amount is setaside for particular purpose is called a provision whereas Reserve is the amount setaside out of profit but not for particular purpose. In most cases provision is incorrectly described as Reserve. One cannot create Reserve for baddebts.
Reserve for doubtful debts definition in accounting?
The reserve for bad debts is a provision set aside for debts (debtors) in the balance sheet that might not be collectable. This provision can be either specific or general: * Specific bad debt provision - a provision set aside for specific or identified individual debts considered not collectable. This provision is allowable for tax deduction * General bad debt provision - a provision set aside for non specific debts, it might be for eexample 100% of all debts over 90 days old and 50% of debts over 60 days old. It is a general provision to cover the fact if any of these debts go bad and is not an allowable deduction for tax purposes
Difference between provision for doubtful debt and bad debt?
Bad debts is a sure loss, irrecoverable on a given date and is written off from the trade debtors. an over aged debtors usually turn out to be bad debtors. provision for doubtful debts is created based on estimation that the certain percentage of debtors may turn out to be doubtful debts. a percentage is worked out based on the debtor's collection period and general economic environment.
How does relevance of the concept of prudence to bad debts and the provision for doubtful debts?
The prudence concept assumes that the worst can happen and tries to account for it in the accounts. The provision for doubtful debts is an estimated percentage of debtors that are not expected to pay during the year. All the debtors may pay up during the year, meaning that the provision for doubtful debts was unnecessary, but it still lets the companies account for any possible bad debts during the year.
What is the definition of debtors and creditors?
Debtors are people who owe money to creditors. Creditors are people who are owed money by debtors. For example, the bank is a creditor allowing people to take out loans and the people taking out the loans are the debtors.
Prepare Debtors control account and Creditors control account?
The financial year of Ali & Co is closed on June 30, 2007. Data regarding Ali & Co isgiven below:Rs.Opening balanceDebtors 75,000Creditors 125,000Closing balanceDebtors 100,000Creditors 150,000SalesCash 100,000Credit 130,000PurchasesCash 80,000Credit 100,000Purchase returns (From credit purchases) 5,000Receipts from debtors ? 88500Payments to creditors ? 65000Discount allowed 2,000Discount received 5,000Bad debts written off 13,000Increase in provision for doubtful debts 2,500Required:Prepare Debtors control account and Creditors control account.
Is provisions for bad debts nominal account?
yeah may be because provision for doubtful debt is a reserve which has been created against the debtors which is an estimated loss and also the journal entry is [Debit] Provision for bad and doubtful debts a/c [Credit] Debtors a/c and here this loss is debited and hence it can be treated as nominal a/c but while preparing trial balance it has a credit balance as its a liability
Debtors or creditors would be more likely to favor inflation?
Debtors.
Format for Debtors control account and creditors control account?
debtors
