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| Provision For Bad Debts Journal Entry |
A provision for bad debts, also known as an allowance for doubtful accounts, This accounting entry is made because there is a possibility that the customers will not pay the amount to whom we have sold i.e account receivable.
Journal Entry for Provision for Bad Debts
Bad Debt Expense Account Debit
Allowance for Doubtful Account Credit
- The "Bad Debt Expense" account is debited because of recognizes the estimated amount of uncollectible accounts.
- The "Allowance for Doubtful Accounts" account is credited. because of This account is a contra-asset account, reducing the net accounts receivable on the balance sheet.
This entry reflects the recognition of bad debt expense and the creation of an allowance for doubtful accounts for potential of uncollectible amounts.
