Journal entry

WHEN ALLOWED:

bad debts a/c dr.

          to debtors a/c

commission a/c dr.

           to bad debts a/c

profit and loss a/c dr.

           to commission a/c

WHEN NOT ALLOWED:

consignor a/c dr.

      to debtors a/c          

If del credre commission is allowed then the consignee has to take the risk of bad debts arising.

thus treatment is

1.  bad debts dr

      to debtors

2. commision A/c dr

        to bad debts

if not allowed then bad debts are treated as normal business expenses and credited to consignor's account

1.  bad debts dr

      to debtors

2. Consignor A/c dr

        to bad debts A/c