10. Bad Debts Any irrecoverable portion of sundry debtors is termed as bad debts. Bad debt is a loss to the business. If it is given in the Trial balance , it should be shown on the debit side of Profit & Loss Account. Bad debts given in the adjustment is to be deducted from sundry debtors in the Balance Sheet and the same is debited to the Profit & Loss Account. Adjusting Entry: Bad debts Account a/c Dr To Sundry debtors a/c
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13. When bad debts and provision is given in the trial balance and new provision is given in the adjustment 1. The bad debts given in the trial balance is debited in the P/L and new provision is added with it. Then the new provision is deducted from the debtors in the B/S. 2. The provision given in the trial balance is either deducted from debtors or it is credited in the P/L.
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18. LOSS OF STOCK Stock loss due to any accident is termed as loss of stock. It can be divided under three heads, they are a) Insured stock loss and the insurance company gave partial claim b) Insured stock loss and the insurance company gave full claim c) Uninsured stock loss in any of these cases, the total loss is credited in the trading account, the actual loss is debited in the P&L account and the claimed amount is shown in the asset side of the balance sheet.