A provision for doubtful debts was to be made equal to 5% of the debtors??? what does it mean how to treat this??balance sheet-asset side- debtors-30,000.

As there is no amount for Provision for Doubtful Debts given in the question, so we can say that there was no provision earlier. But now as the adjustment says that provision has to be created and that too up to 5% of debtors (i.e. Rs 1,500), so this certainly means that the amount of good debtors has reduced by Rs 1,500.

Treatment

In the Revaluation Account (Debit side)

Show Provision for Doubtful Debts A/c on the debit side of the Revaluation Account with Rs 1,500

In the Balance Sheet (Assets side)

Show Provision for Doubtful Debts of Rs 1,500 as deduction from Rs 30,000 (of Debtors) and put the difference amount of Rs 28,500 on the outer coloumn

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