How do you calculate bad debt expense and what do you do with it in relation...

How do you calculate bad debt expense and what do you do with it in relation to an account recieveable account. What numbers go in allowance for doubtful accounts

Expert Solution

Basically there are methods to calculat the bad-debts expense for example
1	Percentage of credit sales
2	Percentage of accounts receivable
3	bad-debts calculated based on aging schedule of accounts receivable

However, whichever method is choosen the accounting treatment remains the same, once
you determines the bad-debts expense


The following Journal entries are passed in relation to bad-debts and accounts receivable

General Journal		Debit	Credit
Bad-debts expense		XX
	Allowance for Doubtful accounts		XX
To record the bad -debts expense for the year


Allowance for Doubtful accounts		XX
	Accounts receivable		XX
To record the written off as uncollectible


Cash		XX
	Accounts receivable		XX
Accounts receivable		XX
	Allowance for Doubtful accounts		XX
To record the collection of accounts previous written off

And finally the accounts receivable is presented in belowmentioned way.

Gross amount of Accounts receivable		XX
Less : Allowance for doubt debts		XX
Carrying amount of accounts receivable	Net	XX

ekkarill92 answered 2 years ago

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