Bad Debts

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
I really strugle on Bad Debts and Partnership accounts (there are lots of posts on partnerships so I will have a look at these) <BR><BR>I have the following stored in my brain:-<BR><BR>If you have to write of a bad debt<BR><BR>DR Bad Debt Expense P&L<BR>CR Debtors/Sales Ledger Control BS<BR><BR>If then you have to calculate a provision I would deduct the above bad debt from the debtors and then multiply this total by the percentage and do the following entry<BR><BR>DR Adjustment for doubtful debts P&L<BR>CR Provision for bad debts BS<BR><BR>The provision will then be deducted on the BS under current assets<BR><BR>Can someone please tell me if this is correct and if I would need to know any more - I am trying not to overload my brain it is still recovering from yesterdays ECR :-)

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Bad Debts

    You are absolutly Correct <img src="i/expressions/face-icon-small-smile.gif" border="0"><BR><BR>One thing that I sometimes forget to do is deduct any bad debts BEFORE working out the provision.. I think i have it drilled in my head now.<BR><BR>Andy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Bad Debts

    Thanks I feel a bit better now, I tend to always forget to subtract the provision from the debtors in the balance sheet, I think that I will remember in the exam. One good thing about making mistakes is that you tend not to make them again!!!<BR><BR>Also are Bad Debt Expense and adjustment for doubtful debts expenses in the P&L<BR><BR>Good Luck for tomorrow<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Bad Debts

    Correct again.. Both the Bad Debts written off and the Provision for Bad Debts Adjustment are in the Profit & loss account under expenses.<BR><BR>Sounds like you got it covered<BR><BR>Good Luck for tomorrow<BR>Andy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Bad Debts

    Mel/Andy<BR><BR>I agree with everything you have put but the one mistake I keep making is that if there is Bad Debt already in the TB, then it has ALREADY been deducted from the SLCA/Debtors figure - so you don't need to deduct it before doing the provision calculation<BR><BR>Hope this makes sense<BR><BR>Elliott

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