The Allowance for Doubtful Account is on the asset side of the balance sheet because this account is a contra account to accounts receivable. In accrual accounting there is an assumption that not all receivables will be paid.
asset . it is contra to account receivable. and it has -Ve value . -ankur
Bad debt is an expense and so reflected in the P&L statement. The allowance for bad debts is a contra-asset account and offsets the amount of the receivable.
Neither, a bad debt becomes an expense on the P&L. the provision created against this is liability
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.
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...
Dr. Bad debt xxx Cr. Assets/Portfolio xxx Below entry wat i underestand is the wrong entry since provision is a liability which is deducted from the loans (assets) it is always a credit balance, it can never appear on the debit (above is the correct entry). Debit Bad Debt Expense Credit Allowance for Bad Debts (a contra-account on the asset side of the balance sheet)
A bad debt is a expense which affects the owners equity as it is charged against the profit and loss account and it decreases the profit of the business.
On the Asset side after Current Assets & Fixed Assets. It forms part of OTHER NON - CURRENT ASSETS as,Intangible Assets (patents, good will, preliminary Expenses, bad / doubtful debts not provided for, etc.
Debit Bad Debts Credit Provisions for Bad Debts
The ISBN of Bad Debts is 0732258162.
Bad Debts was created in 1996.
Bad Debts has 297 pages.