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How do we treat Bad debts... how to create
provision/reserve for bad debts? show an example journal...
for creating provision and then writting off debtors
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Answer Posted / akhtarzeb
treatement of Bad debts following is the example
Suppose Account Receivabel is 2000
at the of the year it has been estimated that 500 is bad
detdts
so it wil be calculate as
Account receivable-Bad debts
Bad dets Dr 500
Account Receivable Cr 500
it will be deducted from Account Receivable
Treatement of Provision or reserve for bad debts
Profits and lOSS a/c Dr
Reserve for bad debts Cr
Note Reserve for bad debts will be calculate from Profit
therefore profit and loss a/c will be debited
| Is This Answer Correct ? | 52 Yes | 28 No |
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