PRC-1 · Chapter 5 · Question 69 of 100
An entity has an opening allowance of Rs. 10,000. During the year, they wrote off Rs. 4,000 in bad debts and recovered Rs. 1,000 from a debt written off years ago. The required closing allowance is Rs. 12,000. What is the net charge to the Statement of Profit or Loss?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 5,000
Explanation
Bad debt written off = 4,000 (expense). Increase in allowance = 12,000 - 10,000 = 2,000 (expense). Bad debt recovered = 1,000 (income). Net charge = 4,000 + 2,000 - 1,000 = Rs. 5,000.
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