In the closing statement of affairs, a provision of 5 per cent is to be created on debtors of Rs 30,000, and plant of Rs 80,000 is to be depreciated by 10 per cent. The two assets appear at:

1. Adjustments of this kind are applied when the closing statement of affairs is drawn up. 2. The provision for doubtful debts is 5 per cent of Rs 30,000, which is Rs 1,500. 3. Debtors therefore appear at Rs 30,000 minus Rs 1,500, that is Rs 28,500. 4. Depreciation on plant is 10 per cent of Rs 80,000, which is Rs 8,000, so plant appears at Rs 72,000. 5. Option B adds the adjustments instead of deducting them, and option D ignores them entirely. 6. Note the textbook's convention that such adjustments are made only in the closing statement, never the opening one. _Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", Illustration 9_