What's the answer?
Dear Student
Correct Answer is option B
Explaination:- There is already unutilised Provision for bad debts of ₹ 1000. There are no bad debts. Debtors are ₹90,000.
Provision for bad debt is required for 1% of 90000 = 90,000×1% = ₹ 900.
Excess Provision for bad debts = 1000-900 = ₹100
So in order to cancel ₹ 100 provision, provision a/c is debited and profit and loss credited.
Regards
Correct Answer is option B
Explaination:- There is already unutilised Provision for bad debts of ₹ 1000. There are no bad debts. Debtors are ₹90,000.
Provision for bad debt is required for 1% of 90000 = 90,000×1% = ₹ 900.
Excess Provision for bad debts = 1000-900 = ₹100
So in order to cancel ₹ 100 provision, provision a/c is debited and profit and loss credited.
Regards