Bad debts

1) Dear Ankit, Bad debts are not at all assets....infact, they are expense.

The entry for bad debts(in respect of which no provision was made earlier) is:

       Bad Debts(P&L) A/c Dr.

                              To Debtors(B/S)

2) When the amount is recovered from bad debts, then following entry is passed:

       Bank A/c(B/S) Dr.

                             To Bad debts recovered(P&L) A/c

Dear

If the Bad Debts recovered it can be treated as Misc Income & shown as Indirect Income in P & L since Profit is going to be added & Tax computation will also involved.

The main reason is if Income Tax scrutiniy come after receipts it will be easy for explanation.