PRC-1 · Chapter 8 · Question 9 of 100
A bad debt of Rs. 900 was recorded by debiting 'Allowance for Doubtful Debts' and crediting 'Receivables.' What is the correcting entry to rectify this error?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Bad Debts Expense Rs.900, Credit Allowance for Doubtful Debts Rs.900
Explanation
A bad debt should be recorded as a debit to the Bad Debts Expense. It was wrongly debited to the Allowance account. The correction debits Bad Debts Expense and credits the Allowance account to restore its balance.
More Correction of Errors MCQs
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