Balance Sheet Extract

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staceyx
staceyx Registered Posts: 14 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
Hello,

Can anybody help with doubtful debts? I have to prepare a balance sheet extract showing the bad debts.

Thanks!

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  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    The doubtful debts figure would be deducted from your Debtors figure on the balance sheet under current assets, the journal for doubtful debts would be: -

    Dr Bad & Doubtful Debts Expense (P&L)
    Cr Doubtful Debts Provision (BS)

    Eg. If you had Debtors of 70,000 and Doubtful Debts of 1,000, the balance sheet extract would look like: -

    Current Assets:
    Debtors 69,000
  • staceyx
    staceyx Registered Posts: 14 New contributor 🐸
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    Thanks for the reply.

    Is there a line for Bad Debts on the Balance Sheet too?
  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    Hello,

    No, just Net it off under Debtors as I had done in example.
  • staceyx
    staceyx Registered Posts: 14 New contributor 🐸
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    Thanks :)
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
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    Tip:

    Whenever you have a question like this, why not look at a real balance sheet in an annual report for a PLC? The debtors (or as it is now known receivables) woudl usually have a reference number after it which woudl point you to one of the notes to the balance sheet. The note for this item woudl show how the receivables figure has been calculated.

    I often find real life examples help to demonstrate what I am teaching in class rather than just relying on fictitious case studies.

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