Whenever a debtor cannot pay, it becomes a bad debt which in reality is an expense as it is a loss for the firm. The basic bookkeeping rules or principles is simply to debit: Bad Debts Account and Credit Debtors Account So how do we treat the books of accounts when a firm manages to [...]
Continue reading about BOOKKEEPING DOUBLE ENTRY RULES/PRINCIPLES for BAD DEBTS RECOVERED:
QUESTION: 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 uncollectible accounts is adjusted [...]
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