1. **Problem Statement:** We have sundry debtors amounting to 40,000 on 31st December 2007. It is estimated that 10% of these debtors are doubtful. Actual bad debts written off are 1,600. We need to find the amount of new provision for doubtful debts to be credited in the profit & loss account. 2. **Formula and Explanation:** Provision for doubtful debts is calculated as a percentage of sundry debtors. Here, provision = 10% of 40,000 = $0.10 \times 40,000$ 3. **Calculate the required provision:** Provision = $0.10 \times 40,000 = 4,000$ 4. **Adjust for actual bad debts:** Actual bad debts written off = 1,600 The existing provision before adjustment is unknown, but the new provision must cover the estimated doubtful debts minus the bad debts already written off. 5. **Calculate new provision to be credited:** New provision = Estimated provision - Actual bad debts New provision = $4,000 - 1,600 = 2,400$ 6. **Conclusion:** The amount of new provision for doubtful debts to be credited in the profit & loss account is **2,400**. **Final answer: 2,400**