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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)!
In 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?
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