wheather baddebts has to take under indirect expenses or provisions for baddebts
Deepak Kumar
(Regional Head)
(59 Points)
Replied 21 January 2010
you need to take provision for bed debts
triumph-CMA
(Chartered Accountant)
(503 Points)
Replied 21 January 2010
saranraj
(CA FINAL)
(419 Points)
Replied 22 January 2010
There are two scenarios
1. If it is 100% known that a debtor is insolvent or not able to pay the amount due, then
Bad debts(indirect expenses) a/c Dr. xxxxx
Sundry Debtors a/c Cr. xxxxx
2. If it is not sure about his insolvency and the situation is that u are more than not likely to receive the amount from debtors,then
Bad debts(indirect expenses) a/c Dr. xxxxx
Provision for bad and doubtful debts(current liabilities) a/c Cr. xxxxxx
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