Archive about 'Bad Debt & Allowance For Doubtful Accounts & Provision'
In accounting, how do we treat Bad debts written off in one accounting period and subsequently paid in a later accounting period?
Tweet Sometimes, a bad debt which has already been written off might be unexpectedly paid by the delinquent debtor. If the bad debt is written off as bad in one accounting period and is subsequently paid in a later accounting period: The amount paid should be recorded as ADDITIONAL INCOME in the Income statement of [...]
Tweet Refresh or test your accounting knowledge by answering the following questions on Discounts, Bad Debts and Provisions QUESTIONS: 1.0 Distinguish between trade discount, cash discount and settlement discount 2.0 How is cash discount treated for accounting purposes? 3.0 How are bad debts treated for accounting purposes? 4.0 A decrease in the provision for doubtful [...]
Tweet 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 [...]
Tweet 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 [...]
Tweet 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 [...]
Tweet 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 [...]
Tweet 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 [...]
Tweet 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 [...]
Tweet Click here for MORE ARTICLES ON RELATED TOPIC (Bad Debts 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 [...]
Tweet 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 [...]