Archive about 'Bad Debt & Allowance For Doubtful Accounts & Provision'

Should Bad Debts Be Written Off Against The Provision For Doubtful Debt?

I have a question. Isn’t it proper to write off any bad debts against the provision account? Answer:   There are two scenario when writing off bad debts:   (a) where earlier provision or allowance has been created (b) where no provision is created and the bad debts need to be directly written off into [...]

Content Page On Bad Debt And Provision

Click to the respective topic: Content Page Different Methods Of Creating Provision For Doubtful Debts Accounting Treatment For the Increase Or Decrease Of Provision For Doubtful Debts Difference Between Bad Debts Written Off And Provision For Doubtful Debts Accounting Treatment-Work Flow On Write Off On Bad Debts   Accounting Test Question BD1 On Accounts Receivables [...]

Answer To Accounting Question BD Test No 2 On Accounts Receivables And Bad Debts

Answer to Question BD Test No 2(a): To record monthly bad debt expenses accrual summary. Debit: Bad debt expense (2% x $4,200,000) $84,000 Credit: Allowance for uncollectible accounts    $84,000 To record year 2005 accounts receivable write offs. Debit : Allowance for uncollectible accounts $90,000 Credit: Accounts receivable  $90,000 Answer to Question BD No 2(b): [...]

Accounting Test No BD 2 : Accounts Receivable And Bad Debts

Question No BD 2: Company XYZ uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by applying 2% times the amount of credit sales for the month. At the year end Dec 31st, an ageing of accounts receivable is prepared and the allowance for uncollectible [...]

Answer To Accounting Question BD No 1 On Accounts Receivables And Bad Debts

Answer to Question No BD 1(a): Being write off of accounts receivables. Debit : Allowance for uncollectible accounts $64,000 Credit: Accounts receivable $64,000 Being bad debt expense for the year. Debit : Bad Debt Expense $46,000 Credit: Allowance for uncollectible accounts $46,000 Computation of bad debt expense for the year: Allowance for uncollectible accounts  b/f [...]

Accounting Test No BD 1 : Accounts Receivable And Bad Debts

Question No BD 1: Company XYZ offers credit terms to its customers. At 31/12/2005, accounts receivable totaled $2,500,000. The allowance method is used to account for uncollectible accounts. At the beginning of the year, the allowance for uncollectible accounts had a credit balance of $68,000. $64,000 Accounts receivable written off during the year. No previously [...]

Difference Between Bad Debts Written Off And Provision For Doubtful Debts.

WHAT IS BAD DEBT WRITTEN OFF? Nowadays the company needs to extend credit to its customers. If the company insists on cash term, it will drive away the customers. This might be worsened if other competitors are able to extend generous credit terms to the customers. In the real world of doing business, there will definitely [...]

Accounting Treatment For The Increase Or (Decrease) Of Provision For Doubtful Debts

INCREASE IN PROVISION FOR DOUBTFUL DEBTS: Assuming earlier in Quarter 1, we have created a provision for doubtful debts of $100,000. Say,at end of Quarter 2, we have reviewed our trade debtors and wanting to increase the provision by an additional amount $50,000. How should we do it ? For Quarter 1, The Original Entry is: [...]

Different Methods Of Creating Provision For Doubtful Debts

METHOD 1: GENERAL PROVISION BASED ON AS % OF CLOSING TRADE DEBTORS BALANCE This methodology is normally called general provision for doubtful debts The term general is because there is NO SPECIFIC identification of the trade debtors who has really turn back. This estimate is based on past trend or management in-depth understanding of the industry Illustration: [...]