In: Accounting
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 |