Following is the extract of Balance Sheet:
| Liabilities | ₹ | Assets | ₹ |
|
Debtors 6,000 Provision for Doubtful Debts 400 |
5,600 |
Additional Information:
Provision for doubtful debt was to be made 5% on debtors.
The following entry to record the above adjustment is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Provision for Doubtful Debts A/c Dr. 100 To Revaluation A/c 100
Provision required = 5% of ₹6,000 = ₹300
Provision already in the books = ₹400
Excess provision = ₹400 − ₹300 = ₹100
Reducing the provision lowers a liability-like deduction from debtors, which is a gain: Provision for Doubtful Debts A/c is debited and Revaluation A/c is credited with ₹100.
NCERT (2026-27 edition):
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