9. Receivables and Irrecoverable Debts

Question 1

What is the double entry for bad or doubtful debt?

Answer 1

Dr Bad and Doubtful Debt Expense (P&L)
Cr Receivables

(And remove from individual memorandum ledger)

Question 2

What is the double entry for a receipt of cash that was previously written off as bad debt?

Answer 2

Dr Cash

Cr Bad and Doubtful Debt Expense

Question 3

What is the double entry to set up an allowance for doubtful debt?

Answer 3

Dr Bad and Doubtful Debt Expense (P&L)

Cr Allowance for receivables (SFP)

Question 4

What is the double entry if doubtful debt is written off?

Answer 4

Dr Allowance for receivables (clear allowance)

Cr Receivables control account (decrease receivables)

Question 5

What is the double entry if doubtful debt is paid?

Answer 5

Dr Cash
Cr Receivables control account (remove receivable)

Dr Allowance for receivables
Cr Bad and Doubtful Debt Expense

Question 6

What is the double entry for the creation of the general allowance?

Answer 6

Dr Bad and Doubtful Debt Expense (P&L)

Cr Allowance for receivables (SFP)

Question 7

What is the impact on the P&L if there is an increase or decrease in allowance during the period?

Answer 7

Increase = expense, decrease = reduction in expense