Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Irrecoverable and doubtfuf debts expense
- This topic has 5 replies, 2 voices, and was last updated 8 years ago by
John Moffat.
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- March 18, 2016 at 1:36 am #306864
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,
PhuongMarch 18, 2016 at 7:13 am #306879You 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).
March 18, 2016 at 8:44 am #306918Thank 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,
PhuongMarch 18, 2016 at 3:14 pm #306965No – 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).
March 19, 2016 at 1:59 am #307017Thank you very much!
March 19, 2016 at 7:49 am #307025You are welcome 🙂
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