Q.The trial balance of a trader on December 31st 2016, shows sundry debtors as ₹ 50,000.
Adjustments :

Bad debts are written off first, then the provision for doubtful debts (5%) is created on the reduced debtors, and finally the provision for discount (2%) is created on the debtors remaining after the doubtful-debts provision — all three charged to the P&L account and deducted from debtors in the balance sheet. …

(b) 5% provision for bad and doubtful debts;

(c) 2% provision for discount on debtors.

Step 1 — Write off further bad debts:

Debtors after bad debts = 50,000 − 1,000 = ₹49,000.

Step 2 — Provision for bad and doubtful debts @5% (on ₹49,000):

5% × 49,000 = ₹2,450.

Step 3 — Provision for discount on debtors @2% (on debtors after deducting the doubtful-debts provision, i.e. on good debtors):

2% × (49,000 − 2,450) = 2% × 46,550 = ₹931.

Profit and Loss Account (debit side):

Particulars	₹	₹
To Bad debts		1,000
To Provision for bad and doubtful debts		2,450
To Provision for discount on debtors		931
Total charged to P&L		4,381

Balance Sheet (Assets side):

| Particulars | ₹ | ₹ | …