Provision for bad debts (Provision for doubtful debts)

May 19th, 2015
Studypool Tutor
Valley City State University
Price: $10 USD

Tutor description

The provision created to cover the next year’s bad debt expense out of the current year’s debtors is known as provision for bad debts. This provision is created on the debtors after deducting the current year’s bad debt.

Word Count: 3761
Showing Page: 1/13
BAD DEBTS AND PROVISION FOR DOUBTFUL DEBTS Bad debtsThe amount of the debtors which cannot be recovered is known as bad debt. At the end the accounting year, the amount of bad debt is shown as an expense in the profit & loss account and deducted from the debtors. The double entry for recording the bad debt is: Debit Bad debt account Credit Debtors accountAt the end of the year, while preparing the final accounts, the bad debt account is transferred to the profit & loss account by passing the following adjustment entry: Debit Profit & loss account Credit Bad debt accountProvision for bad debts (Provision for doubtful debts)The provision created to cover the next year's bad debt expense out of the current year's debtors is known as provision for bad debts. This provision is created on the debtors after deducting the current year's bad debt. The double entries required for creating the provision for bad debt are: First year Debit Profit & loss account and Credit Provision for bad debts account. Second year and subsequent years: For an increase in the provision for bad debt: Debit Profit & loss account and (with the amount increased)

Review from student

Studypool Student
" Thanks, good work "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1819 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors