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Trial Balance query

  • Student
  • 6 posts
  • # 117925

One of the questions in an M5 mock had a trial balance with a debit and credit entry for closing stock, same amount, and two entries for provision for bad debt, one a credit and one a debit but not the same amount? I've never seen this before - can anyone explain for me?

  • Companion Member PM.Dip
  • Accredited Training Provider
  • 10 posts
  • # 117984

Hi Kitten58, I would hope that you have had assistance in solving your query by now but just in case you haven't, I will try and explain.

It sounds like your yearend adjustments have been completed already but instead of seeing the P&L and Balance sheet, you are seeing a list of balances, therefore:

Stock:

The debit value is the Balance Sheet item (current asset) and the credit value is the Trading P&L item (closing stock)

Bad debt provision:

The debit value is this years expense for the P&L whereas the credit value is the accumulated provision for the Balance Sheet (reduction in debtors)

 

I hope this helps.

Gill 

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