chapter 13 - irrecoverable debts & prov. for doubtful debts

Question 1

definition of:
irrecoverable/ bad debt

explain?

Answer 1

an amount owing to a business which will not be paid by the credit customer

when cred customer’s acc is closed - transfer amount written off to bad debts acc
at the end of financial, total bad debt account transferred to income statement *expense

Question 2

reasons for bad debts?

Answer 2

• customer has disappeared
• customer has gone out of business
• customer is unable to pay
• customer’s death

Question 3

when debt is written off, dr cr what?

Answer 3

dr- bad debts acc
cr- debtor’s acc

at the year end:
dr- income statement
cr- bad debt acc

Question 5

what principle is applied in writing off bad debt?

Answer 5

prudence

Question 6

recovery of debts written off

Answer 6

as debtor’s acc closed d, amount received is debited in cash book and credited to bad debts recovered account

when amount received:
dr- cash book
cr- bad debt recorded account

at the year end
dr- bad debt recovered account
cr- income statement

Question 9

definition of:

debt written off

Answer 9

may be recovered if a credit customer pays some, or all, the amount owed, after the amount was written off