03 01 08 Irrecoverable and Doubtful Debts

Question 1

What is the double entry journal for recording irrecoverable debt?

Answer 1

Irrecoverable Debts (SPL) - Debit
SLCA (SOFP) -Credit

Question 2

What is the double entry journal for recovery of an irrecoverable debt?

Answer 2

Bank - Debit
Irrecoverable Debt (SPL) - Credit

Question 3

What is a specific doubtful debt allowance?

Answer 3

One that is provided against a particular customer

Question 4

What is a general doubtful debt allowance?

Answer 4

One that is applied as a percentage to the whole value of the SLCA (after writing of irrecoverable debts and deducting the specific allowance)

Question 5

What is the double entry journal for a specific doubtful debt allowance?

Answer 5

Allowance for doubtful debts (adjustments) (SPL) - debit

Allowance for doubtful debts (SOFP) - Credit

Question 6

What is the equation for calculating the closing balance for doubtful debts?

Answer 6

Opening Balance for doubtful debts - Allowance for doubtful debts (adjustments) = Closing allowance for doubtful debts

Question 7

What is the double entry adjustment for the opening allowance doubtful debts to INCREASE the closing balance?

Answer 7

Allowance for doubtful debts (Adjustments) (SPL) - Debit
Allowance for doubtful debts (SOFP) - Credit

(An increase in the closing allowance gives rise to an expense and therefore a debit entry in respect of “allowance for doubtful debts (adjustments)”

Question 8

What is the double entry adjustment for the opening allowance for doubtful debts to DECREASE the closing allowance?

Answer 8

Allowance for doubtful debts (SOFP) - Debit
Allowance for doubtful debts - adjustments (SLP) - Credit

(A decrease in the closing allowance gives a rise to a decease in expense and therefore a credit entry in respect of the “Allowance for doubtful debts (adjustments)”