SOLUTION
Working Notes:
WN1: Calculation of Provision for Doubtful Debts
Provision to be created = (76,000 – 6,000) × 5/100 = Rs. 3,500
Old Provision = Rs. 2,000
New Provision to be created = 3,500 – 2,000 = 1,500
Ashok and Bhaskar are partners in a firm sharing profits in the ratio of 3: 2. They admitted Chaman as a partner for 1/4th share of profits. At the time of admission of Chaman, Debtors and Provision for Doubtful Debts appeared at Rs. 76,000 and Rs. 8,000 respectively. Rs. 6,000 of the debtors proved bad. A provision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary Journal entries.