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General Accounting Discussions: Accounting Treatment - Double Entry

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  1.  
    • CommentAuthortgm603
    • CommentTimeAug 23rd 2009
     
    Please help me on this accounting treatment as I'm first doing this type of adjustment for a company which is going to apply for strike-off of business.

    This company Financial Year Ended is 31 July 2009.
    There are some Account Receivable which has outstanding . However , the Director confirmed that those outstanding ( b/f from previous financial year ) are unable to collect back and would like me to treat as bad debts . I adjust as DEBIT Bad Debts Account and CREDIT Account Receivable ( for each individual Trade Debtor ) . Is my double entry correct ?

    And , the account I DEBIT is it correct as Bad Debts or should be Bad Debts Written-Off ?

    Thank you for helping.
    • CommentAuthorpk
    • CommentTimeAug 23rd 2009
     
    If your compnay has already created a provision for the bad debt, then charge the uncollectible receivables to the "Bad Debt Provision Account" rather than charging it to "Bad debt Expense Account".
    Thankful People: tgm603
    • CommentAuthortgm603
    • CommentTimeAug 24th 2009
     
    pk, thanks for your reply. My company did not have provision for Bad Debts. I will then take up as Bad Debts Expense Account.

    Thanks again for helping.
    • CommentAuthorpk
    • CommentTimeAug 25th 2009
     
    If there is no Provision for B/Debt, then you can charge it to the B/Debt Expenses Account. Since you expect some of the receivables as uncollectible, it is better to make a certain % of Receivables as Provision to ensure you follow matching principle.


    savin.yakeep@yahoo.com
    Thankful People: tgm603
    • CommentAuthortgm603
    • CommentTimeAug 25th 2009
     
    pk, I will let my boss know about provision for bad debts and see what's his decision then. Thanks for the follow up answer.
    • CommentAuthorLargeCat
    • CommentTimeAug 26th 2009
     
    Bad AR must set up provision account.
    Thankful People: tgm603
  7.  
    Hi i agree with the Large Cat because Bad AR setup for the provision account!

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