Calculate the provision for Discount on Debtors from the following information.
Sundry debtors = ₹20,000
Bad debts = ₹1,000
Provision for doubtful debts = ₹500
Provision for discount on debtors is 5%.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹925
Provision for Discount on Debtors is calculated on amount after adjusting these.
Sundry debtors- Bad debts - Provision for doubtful debts
20,000 - 1,000 -500
= 18,500
Provision for discount = 18,500 x 5/100
= ₹925