Unit 5 - Bad Debts

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

Does anyone know an easy way of remembering bad debts write off I ged confused with the provision for doubtful debt!!

I've got my Unit 5 sim tommorrow and I'm just not ready!!!

Dr Doubtful Debts
Cr SLC

Then in the trial balance would I Dr Bad debt and carry to the P & L
Cr the amount to Debtors and carry to balance sheet?

I havent got anything for provision for doubtful debts though - should I??!!

Am I right?? or am I totally confused!! :?

x

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Unit 5 - Bad Debts

    A Provision for bad debts is an anticipation that an accountant forecasts how much of its debts the company is going to provide may be bad debts.

    Therefore, double entry of provision for bad debts when the new balance of the provision for bad debts is greater then the old balance of provision for bad debts would be as follows:

    Dr Bad debts expense(P&L)

    Cr Provision for Bad debts (B/S)

    Double entry of provision for bad debts when the new balance of the provision for bad debts is Lower then the old balance of provision for bad debts would be as follows:

    Dr Provision for Bad debts (B/S)

    Cr Bad debts expense(P&L)


    In the Balance sheet

    under the subheading of the current assets section

    we enter the debtors balance
    and deduct the new provsion for bad debts balance.

    Please note that a Provision for bad debts does is not part of the double entry of the debtors control/sales ledger control account.

    But a write of a debtor is and therefore double entry would be to

    Dr Bad debts(P&L)

    Cr Sales Ledger Control/Debtors Control (B/S)










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