Nancy Chawla In: Category - Accounting OthersShow treatment of provision for doubtful debts in balance sheet?balance sheetprovision for doubtful debts ShareFacebook1 AnswerVotedRecent Vaishnavi 2020-08-27T23:21:53+05:30Added an answer on August 27, 2020 at 11:21 pm Meaning of Provision for Doubtful DebtsAlmost every business entity has some debtors, of which recovery is doubtful. It may not be realised. For this purpose, provision is created which is known as provision/reserve for doubtful debts. This provision is created on the basis of experiences of the previous years. It is an anticipated loss therefore provision for doubtful debts is necessary.Treatment of Provision for Doubtful Debts in Balance SheetFinancial StatementCalculationTreatmentBalance SheetIt is calculated on the following amount:Sundry Debtors – Bad DebtsDeducted from Accounts Receivables/Sundry Debtors under the head Current AssetsLet me help you understand the treatment better with the help of an example using trial balance and balance sheet.ExampleShow treatment of Provision for Doubtful Debts in the Balance Sheet of ABC Ltd.5% provision for doubtful debts is calculated on 500,000 (5% * 500,000 = 25,000) & deducted from sundry debtors.1Reply Share ShareShare on FacebookShare on TwitterShare on LinkedInShare on WhatsAppLeave an answerCancel replyYou must login to add an answer. Username or email* Password* Captcha* Click on image to update the captcha. Remember Me! Forgot Password?