Bad Debt

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jewels.p
jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
If a Debt of £500 is irrecoverable am I right in thinking it gets debited to the Bad Debts Account and Credited to the Allowance for Receivables Account?

Its just that I am trying to do Activity 8 in the Kaplan DFS Book and it doesnt tell you.

The Question is:

At present the Allowance for Receivables is sitting at £1,000. A debt of £500 is irrecoverable and written off, and the receivables allowance is to be revised to £1,500.

I am aware that I have to deduct the £500 irrecoverable debt and increase the account from £1,000 to £1,500 but I just wanted to check the journal entries as it doesnt tell you in the answer

Thanks

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  • Ampsie
    Ampsie Registered Posts: 145 Dedicated contributor 🦉
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    Hi Jewels,

    That sounds exactly right to me!

    Ampsie
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    Ampsie wrote: »
    Hi Jewels,

    That sounds exactly right to me!

    Ampsie

    Hi Ampsie,

    Yeah but what is the journal entries for the bad debt adjustment?
  • Ampsie
    Ampsie Registered Posts: 145 Dedicated contributor 🦉
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    Last time i wrote sales debtor off i did this:

    Dr sales ledger
    Cr customer account

    Dr bad debt account
    Cr allowances for receivables

    Hope that helps!

    Ampsie
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