The Company made Sales to Kishan & Co of Rs 35000
The Company estimates that only 32000 is recoverable from Kishan
Kishan Dr 35000
To Sales 35000
P& L Dr 3000
To Provision for Bad Debts 3000
(Provision for Bad Debts is a provision,since it increases,we credit it)
Suppose next month kishan paid 32000 by cheque in full settlement
Bank Dr 32000
Provison for Bad Debts 3000
To Kishan 35000
(Provision for Bad Debt liability is now decreased,hence we debit it)
Written on Feb. 13, 2017, 10:08 p.m.