In an organization, provision for Bad debts is Rs. 5,000 in the beginning. At the end total sales is Rs. 6,00,000 out of which Rs. 1,00,000 is cash sales. 1% provision is to be created on remaining debtors. The amount to be debited to profit and loss account in respect of provision is.

The correct answer is C. Rs. 1,000.

The amount of provision to be created on remaining debtors is 1% of Rs. 5,00,000 – Rs. 1,00,000 = Rs. 4,00,000 = Rs. 400.

The amount of provision already created in the beginning is Rs. 5,000.

Therefore, the amount to be debited to profit and loss account in respect of provision is Rs. 400 – Rs. 5,000 = Rs. 1,000.

Here is a brief explanation of each option:

• Option A: Rs. 6,000 is incorrect because it is the total sales, not the amount of provision to be created.
• Option B: Rs. 5,000 is incorrect because it is the amount of provision already created in the beginning, not the amount of provision to be created.
• Option C: Rs. 1,000 is correct because it is the amount of provision to be created, less the amount of provision already created.
• Option D: Zero is incorrect because it is the amount of provision already created, not the amount of provision to be created.