am i kind of getting this??

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi

I am just look at bad and doubtful debts and just want to know if im on the right track!

say i have a debtor of £21,000 that i know has gone bankrupt. and another debtor of £7,000 that i may not receieve money from. then take 2% for gen prov

would i -

CR Debtors 21,000
DB Bad Debts 21,000

then for the 7,000 that im not sure il recover

CR Prov for doubtful debts £7,000
DB Bad & Doubtful Debts (spec) £7,000
DB Bad & doubtful debts (gen) £946

not sure on where to put the other side of the 946?

Sorry if that makes no sense what so ever but i kind of know what i mean :-)

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:am i kind of getting this??

    Hi

    I would credit Prov for doubtful debts for the General provision - same as you did for the £7000.

    Yas
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:am i kind of getting this??

    cool thanks yazi. do you think it was the the only part i went worng??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:am i kind of getting this??

    I would do it the same (I'm just using different wording!)

    Write off Bad Debt

    CR Debtors 21,000 (BS)
    DB Bad bebts written off 21,000 (P&L)
    You are removing the bad debtor from the Balance Sheet and reducing profit by taking the hit for the debt.

    The second part would depend on the way the question is structured.

    If you are providing for the full 7,000 then
    Cr provision for doubtful debts(Spec) (BS) 7,000
    Dr Doubtful debt adjustment (P&L) 7,000
    Then calculate the 2% for the total debtors less the 7,000

    If you are not providing for the full 7,000 then it is just 2% of the Debtors.
    CR Provision for DD (BS)
    DR DD Adj (P&L)

    Check your calculation by making sure the journal DR & CR totals agree.

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