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the company overcharges students 20000 and plans to settle that account in 30 days.how to deal with this
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∙ 9y ago
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Explain why noncollectable accounts have both income statement and balance sheet implication for accounts?
If you can't collect a receivable, you have to write it off. Doing so means you credit the receivable on the balance sheet and debit the income statement with bad debt expense. This entry essentially reverses the initial entry which recognized the revenue and put the receivable on the balance sheet in the first place.
What is the journal entry of provision for bad and doubtful debts?
Provision for bad and doubtful debt is not go to profit and loss account, and it is go to balance sheet.
Is allowance for bad debts debit or credit?
It depends on how you do it. If you use a place that consolidates your debt by asking credit card companies & the like to reduce your debt or interest rate, then yes, it could be harmful to your.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
Is provision for doubtful debt a current liability?
Provision for doubtful debt is current asset which is created as a reduction in accounts receivable balance and which is adjusted at actual bad debt.
What is the percentage-of-receivables method?
The percentage-of-receivables method is a way for a company to estimate its Allowance for Uncollectible Accounts and Bad Debt Expense. It is considered a "Balance Sheet Approach," because total Allowance for Uncollectible Accounts is estimated as a percent of total Accounts Receivable. Bad Debt expense then becomes the increase between the previous year's Allowance and the current year's Allowance.
When is Bad debt expense removed from the balance sheet?
Bad Debt Expense does not appear on the balance sheet. It is only on the income statement. Allowance for Uncollectible Accounts does appear on the balance sheet.
Bad debt on a balance sheet?
No, bad debt is an expense and is reflected on the P&L Statement.
Is bad debts account a balance sheet item or income statement?
It depends on how you have already treated the bad debt in the accounts, if you've already either written the debt off or fully provided for it then the recovery of the debt will be a P&L transaction (income statement)
When there is an allowance for bad debts on the balance sheet the journal entry for writing off an account receivable is?
debit bad debtCredit allowance for bad debt
What entries are required to write off bed debt?
A bad debt occures when a customer doesn't pay to the company, the company has to consider this as an expense as payment will not be received, so:Debit the Bad Debt Expense and take this to Income Statement expenses(overheads).Credit the Receivables In the balance Sheet as bad debts means customer will not pay, so you are decreasing your receivable asset which normally is a debit becaused of being an asset but to decrease the asset, do the opposite, i.e. Credit it.Debit: Bad Debt Expense (Income Statement)Credit: Receivables (Balance Sheet)
How does the bad-debt expense appear on the income statement?
Yes it is. There's a provision for bad debt expense in the income statement and that same amount gets either added to the reserve for doubtful accounts on the balance sheet or reduces the accounts receivable account, on the balance sheet. That depends on whether its a reserve for future write-offs or a write off of a certain customer balance.
Explain why noncollectable accounts have both income statement and balance sheet implication for accounts?
If you can't collect a receivable, you have to write it off. Doing so means you credit the receivable on the balance sheet and debit the income statement with bad debt expense. This entry essentially reverses the initial entry which recognized the revenue and put the receivable on the balance sheet in the first place.
Which side does a debt sit on in double entry?
Debit Bad Debt Expense. Credit Allowance For Doubtful Accounts (a contra-asset account on the Balance Sheet). Before you do the double entry for the bad debts recovered, you have to reinstate the debt by making the following entries:- Dr. debtors account Cr. bad debts recovered account after this, you will...
What is the journal entry of provision for bad and doubtful debts?
Provision for bad and doubtful debt is not go to profit and loss account, and it is go to balance sheet.
Do bad debt expense has a debit balance?
yes
Why is provision for bad debts based on estimates?
because you are allowing for the potential that some of your customers may not pay, wihich would make you less profitable at that time. This is put on your balance sheet because it is likely that you will have some bad debt and reflecting it ahead of time is fair.
Is allowance for bad debts debit or credit?
It depends on how you do it. If you use a place that consolidates your debt by asking credit card companies & the like to reduce your debt or interest rate, then yes, it could be harmful to your.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
