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Following is the trial balance of a firm as on 31.03.2022 :
Additional discount allowed to debtors during the year is t 20,000.The firm has a policy of maintaining a provision for discount to debtors equal to 10% of the Trade Receivables' balances. Total amount to be charged to Profit and Loss Account (for the year ending 31.03.2022) for discount allowed and provision ...for discount created will be:
Rs 25,000
Rs 13,000
Rs 9,000
Rs 33,000
- Discounts Allowed to Debtors: During the year, the total discount given to debtors is Rs 20,000. Additionally, Rs 4,000 has already been accounted for, making a total of Rs 24,000 for discounts allowed.
- Existing Provision for Discount to Debtors: The existing provision is Rs 14,000.
- New Provision Required: The firm's policy is to maintain a provision equal to 10% of trade receivables. So, 10% of Rs 2,50,000 is Rs 25,000.
- Provision Adjustment: The increase needed in the provision is Rs 25,000 (new provision) - Rs 14,000 (existing provision) = Rs 11,000.
- Total Charge to Profit & Loss Account: Rs 24,000 for discounts allowed + Rs 11,000 for provision adjustment = Rs 35,000.
- Correct Option: None of the given options exactly match Rs 35,000.
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