Om and Shiv are partners in a firm sharing profits equally

49 :- Om and Shiv are partners in a firm sharing profits equally.

An amount of Rs 12,000 is due from Mohan, a debtor, is to be written off as no longer receivable. Provision for doubtful debts on remaining debtors is to be maintained at the current rate.
What amount of provision for doubtful debts should be credited to maintain its current rate ?

Solution:- Current rate of provision = 10%
Remaining debtors = 1,50,000 – 12,000 = Rs 1,38,000
Amount of provision which is to be created = 1,38,000 x 10% = Rs 13,800
But provision of Rs 3,000 (15,000 – 12,000) is already available

Therefore, Provision of Rs 10,800 is to be created (13,800 – 3,000)