Writing off bad debts
This query is : Resolved
17 September 2012
What will be accounting entries from creating a provision to writing off bad debts. Pls explain with an example.
17 September 2012
First of pass the journal entry of actual bad debts .
Entry for recording actual bad debt which did not record in books of business
1. Bad debts account Dr. xxxxx
To Sundry Debtors Account xxxxxx
Entry for transferring bad debts to provision for bad debts Account
2. Provision for bad debts account Dr. xxxxxx
To Bad Debts account xxxxx
Transfer of provision for bad debts account to profit and loss account
3. Profit and loss account Dr. xxxxxx
To Provision for bad debts account xxxxx
Entry for recording actual bad debt which did not record in books of business
1. Bad debts account Dr. xxxxx
To Sundry Debtors Account xxxxxx
Entry for transferring bad debts to provision for bad debts Account
2. Provision for bad debts account Dr. xxxxxx
To Bad Debts account xxxxx
Transfer of provision for bad debts account to profit and loss account
3. Profit and loss account Dr. xxxxxx
To Provision for bad debts account xxxxx
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