I've come across TWO entries, which one is right?
1) Dr Irrecoverable Debt Exp., Cr Rec.
2) Dr Allowance, Cr Rec.
I believe it's the second one, but, eg, in a question in the BPP kit, the answer proclaims it be 1)!
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Entry for Writing Off Doubtful debt
10y ago#1In fact you can do either (there are no rules), but the first entry is by far the easiest to deal with.
I do suggest that you watch the free lectures on irrecoverable and doubtful debts where this point is dealt with.
Actually, I have seen the concerning lectures. (Which explain the examples)
And the answer eg for the expense does come out right, however, my issue regards a single question. This one:
"A company has been notified that a receivable has been declared bankrupt. The company had previously provided for this doubtful debt. Which of the following is the correct double entry?
------------ DR ----------------------------- CR
A Bad debts account ------------ The receivable
C Allowance for receivables ---The receivable "
C seems to be, to me, logically the answer.
Unfortunately, the kit says that the answer is A.
What would you choose?
10y ago#3As I wrote in my previous reply, A is the better answer.
However that would be a bad question to be asked in the real exam because A and C are both allowable.
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