 |
| Bad Debts Journal Entry |
When the business realizes that it cannot collect the full amount from the account receivable i.e. from the customer. Then he has to maintain bad debt expenses in our book. in this process involves two journal entries. Estimated bad debt will have to be recognized. And secondly, you will have to write off the specific amount which is confirmed as uncollectible.
Estimating Bad Debt Expense Journal Entry
Bad Debt Expense A/c Debit
Allowance for Doubtful A/c Credit
Second Entry
Allowance for Doubtful A/c Debit
Accounts Receivable/Debtor Credit
- The "Bad Debt Expense" account is debited because of to recognizes the estimated amount of uncollectible amount.
- The "Allowance for Doubtful Accounts" is credited. because of This account is a contra-asset account and reduces the net accounts receivable on the balance sheet.
- The "Accounts Receivable" is credited because of to reflects the specific customer's account that is deemed uncollectible.
These principal entries follow the matching in accounting by recognizing bad debt expenses in the same period as the related sales.
