Nancy Chawla In: Category - Accounting Others Show treatment of provision for doubtful debts in balance sheet? balance sheetprovision for doubtful debts Share Facebook 1 Answer Voted Recent Vaishnavi 2020-08-27T23:21:53+05:30Added an answer on August 27, 2020 at 11:21 pm Meaning of Provision for Doubtful Debts Almost 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 Sheet Financial Statement Calculation Treatment Balance Sheet It is calculated on the following amount: Sundry Debtors – Bad Debts Deducted from Accounts Receivables/Sundry Debtors under the head Current Assets Let me help you understand the treatment better with the help of an example using trial balance and balance sheet. Example Show 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. 0 Reply Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Leave 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?