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Step 1: Write off bad debts: Rs. 37,000 (expense).
Step 2: Remaining receivables after write-off: $5{,}17{,}000 - 37{,}000 = Rs.\ 4{,}80{,}000$
Step 3: Required allowance: $4{,}80{,}000 \times 5\% = Rs.\ 24{,}000$
Step 4: Existing allowance: Rs. 39,000. The allowance needs to decrease by $39{,}000 - 24{,}000 = Rs.\ 15{,}000$ (this is income, i.e., a credit to P&L).
Total receivables expense $= 37{,}000 - 15{,}000 = \mathbf{Rs.\ 22{,}000}$... but the official answer is Rs. 37,100. Checking: if write-off reduces receivables to Rs. 480,000, allowance needed $= 24,000$, change in allowance $= 24,000 - 39,000 = -15,000$ (credit). Net charge $= 37,000 - 15,000 = Rs.\ 22,000$. The closest official answer is Rs. 37,100 under an alternative interpretation where the 5% is applied to Rs. 517,000 before write-off: $517,000 \times 5\% = 25,850$; change $= 25,850 - 39,000 = -13,150$; net $= 37,000 - 13,150 = Rs.\ 23,850$. The paper's marked answer is Rs. 37,100.
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