accounts

This query is : Resolved

survesh (Querist)
Follow

28 August 2009 i want to know the accounting treatment of prvision for bad debts and bad debts? We have 5 to six debtors that are unpaid from a year now I want to close the account but not 100% so I can pass the entry example below

bad bebt a/c......dr (under indirect expenses)
provision for bad debta/c (under what group should the provision of badbebts made)

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
Follow

28 August 2009 Provision for bad debts is a provision to be made against a unrecoverable debt, that means you are suspecting that this amount will not be collected.
If the debt is finally not in collectable in nature then you have to write it off from your books.In this time, you are sure that this will not be collected any more.
Please note that Provision is not an allowable expenditure in Income tax Act whereas bad debts is an allowable expenditure.
If you are decided to make provision against a particular debtor, please pass this entry,
Debit : Baddebts a/c(Indirect expenditure)
Credit:Provision for bad debts a/c (Provisions-Current liability)

After writing off:
Debit: Provision for Bad debts a/c
Credit:ABC & Co.

If you are directly writing off bad debts with out provision:
Debit : Baddebts a/c
Credit: sundry debtors a/c.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

Sapan Kumar Nayak

S D Kannan

giriswar

Vivekanand Sagar

eddanapudi murali

Subscribe Now

accounts

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA