Bad debts should considered as non cost expenses .i.e expenses whoch will not become part of costing , because bad debts are those loses which want be recoverd and they are charged aginast profit and loss.
Bad Debts was created in 1996.
[Debit] Bad debts [credit] accounts receivable
bad debts a/c Dr To sundry debtors a/c
The debts are treated as expenses in the profit and loss account, being entered on the debit side of the income statement coloums.
Debit cashCredit bad debts
there is a difference between doubtful and bad debts,doubtful is future happening that means a provision type it gives an intimation for the finance department of the company to create some provision for such debtors that they r going to be treated as bad debts,where as bad debts means they r being conformed as non recovery after the situations like closure of business r dissolution of the firm takes place r insolvency petition might have been taken place after proper steps regarding recovery have been taken place they will be treated as "bed debts"
Debit Bad Debts Credit Provisions for Bad Debts
The ISBN of Bad Debts is 0732258162.
Bad Debts was created in 1996.
Accounts that are unlikely to be paid and are treated as loss is considered as bad debt.Provision for Bad Debts can also be the income statement accountalso known as Bad Debt Expense or Noncollectable Account Expense. In this situation, the Provision for Bad Debts reports the credit losses that refer to the period shown on the income statement.
Bad Debts has 297 pages.
[Debit] Bad debts [credit] accounts receivable
Bad debts DR Allowance for doubtful debt CR Some accounting practioners may use provison for doubtful debts instead of allowance for doubtful debts. Example of bad debts, suppose a customer was unable to pay their debts totalling $150. This will be the journal entry for the transaction: Bad debts 150 Allowance for doubtful debts 150
bad debts a/c Dr To sundry debtors a/c
The debts are treated as expenses in the profit and loss account, being entered on the debit side of the income statement coloums.
Debit cashCredit bad debts
The Allowance for bad debts will go the on the debit side of the Balance Sheet. If total debtors are 20000 and 5% is allowed as allowance for bad debts then 19000 will be shown as debtors and 1000 will be shown as allowance for bad debts in the debit side of the Balance Sheet. When the bad debts actually occur for e.g. if next year bad debts of 500 actually turn out, then the allowance will be reduced by Rs. 500 and the bad debts will be shown in the Dr. Side of Profit and Loss Account.