The debtors are Rs. 30,000 (before bad debts of Rs. 1,000 and provision of bad debts at 5%). A provision for discount on debtors @ 2% would be-

[amp_mcq option1=”Rs. 600″ option2=”Rs. 575″ option3=”Rs. 571″ option4=”Rs. 551″ correct=”option2″]

The correct answer is B. Rs. 575.

The debtors are Rs. 30,000 (before bad debts of Rs. 1,000 and provision of bad debts at 5%). This means that the net amount of debtors is Rs. 29,000 (30,000 – 1,000).

A provision for discount on debtors @ 2% means that 2% of the net amount of debtors is set aside to cover bad debts. This is calculated as follows:

2% * 29,000 = Rs. 575

Therefore, the provision for discount on debtors @ 2% is Rs. 575.

Option A is incorrect because it is the amount of the provision for bad debts, not the provision for discount on debtors.

Option C is incorrect because it is the amount of the provision for discount on debtors, but it is calculated using the wrong percentage.

Option D is incorrect because it is the amount of the provision for discount on debtors, but it is calculated using the wrong net amount of debtors.