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FAbad debts

Ttimfreeman15y ago
if one makes a 'specific allowance' for a doubtful debt what are the debit and credit entries

Cr Receivables
Dr Allowance for receivables

or

cr receivables
dr expense (write offs)
Former userFormer user15y ago#1
It's the same as a general allowance:

Dr Bad Debt Expense
Cr Allowance for Doubtful debts

The transactions you list above are the common trick- wrong answers. ('Distractors' in ACCA jargon).

'Specific allowance' means we go through our list of debtors and find individual accounts that are higher risk (e.g. over 90 days late) than the others.

These get a 'specific allowance' at a higher rate.

The remaining accounts get lumped together, and then they get the 'general allowance' rate.

Either way, the debits and credits are the same. They are just at different rates.
Former userFormer user15y ago#2
Thank you for that clarification....... It was helpful......!
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