PRC-1 · Chapter 5 · Question 61 of 100
A business wrote off Rs. 25,000 in bad debts during the year. The opening allowance was Rs. 30,000. The required closing allowance is Rs. 26,000. What is the total charge to the Statement of Profit or Loss for bad and doubtful debts?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 21,000
Explanation
Bad debt expense = 25,000. The allowance decreases from 30,000 to 26,000, creating an income (reduction in expense) of 4,000. Total charge = 25,000 - 4,000 = Rs. 21,000.
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