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Dear Sir,
My question is:When it happens that the Irrecoverable and doubtful debts expense account has balance on credit side, how should we close off the account?
Sincerely,
PhuongYou close it off in the normal way. However instead of being an expense in the Statement of profit or loss, it will effectively be income (although we would show it in fact as a negative expense).
Thank you for your prompt reply, Sir.
Could you please clarify how to write the extract of the Income Statement, for e.g. if the Irrecoverable and doubtful debts expense a/c has a credit balance of, say, $1,000.
I think that it can be put under the item named “Other Income”, but I’m not sure. And if this is true, how should we interprete it?Sales x
Cost of sales (x)
Gross Profit x
Other Income
(???) 1,000
Expenses (x)
…Sincerely,
PhuongNo – as I wrote before, we list in under expenses but as a negative expense (so instead of increasing the total of expenses, it reduces it).
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