is where you make provision for personal that is might no pat there debts
The reserve for bad debts is a provision set aside for debts (debtors) in the balance sheet that might not be collectable. This provision can be either specific or general: * Specific bad debt provision - a provision set aside for specific or identified individual debts considered not collectable. This provision is allowable for tax deduction * General bad debt provision - a provision set aside for non specific debts, it might be for eexample 100% of all debts over 90 days old and 50% of debts over 60 days old. It is a general provision to cover the fact if any of these debts go bad and is not an allowable deduction for tax purposes
Profit & Loss A/c [Debit] Provision for bad debts [Credit]
The double entry for recording provision for doubtful debt is: Dr. Doubtful Debts (P&L expense a/c) xxx Cr. Provision for Doubtful debt xxx Once it is certain that the debt has gone bad debt; following entry is made: Dr. Provision for Doubtful debt xxx Cr. Loan / Portfolio xxx
No?
Debit Bad Debts Credit Provisions for Bad Debts
is where you make provision for personal that is might no pat there debts
The reserve for bad debts is a provision set aside for debts (debtors) in the balance sheet that might not be collectable. This provision can be either specific or general: * Specific bad debt provision - a provision set aside for specific or identified individual debts considered not collectable. This provision is allowable for tax deduction * General bad debt provision - a provision set aside for non specific debts, it might be for eexample 100% of all debts over 90 days old and 50% of debts over 60 days old. It is a general provision to cover the fact if any of these debts go bad and is not an allowable deduction for tax purposes
Profit & Loss A/c [Debit] Provision for bad debts [Credit]
In the P and L A/C calculate the percentage mentioned for provision for doubtful debts on sundry debtors and write the amount. This will be your new provision
The double entry for recording provision for doubtful debt is: Dr. Doubtful Debts (P&L expense a/c) xxx Cr. Provision for Doubtful debt xxx Once it is certain that the debt has gone bad debt; following entry is made: Dr. Provision for Doubtful debt xxx Cr. Loan / Portfolio xxx
No?
Provison for doubtful debts, under liabiliity, will be created by debiting bad debts account.
frs 18
The provision for bad debts will be categorized under the profit and loss account.
The prudence concept assumes that the worst can happen and tries to account for it in the accounts. The provision for doubtful debts is an estimated percentage of debtors that are not expected to pay during the year. All the debtors may pay up during the year, meaning that the provision for doubtful debts was unnecessary, but it still lets the companies account for any possible bad debts during the year.
debit