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I came across a question, it asked me what would happen to control accounts receivables when irrecoverable debts or allowances were introduced, I cant remember the question completely but that all I can remember, kindly assist me.
Irrecoverable debts are credited to the receivables control account. Allowances for doubtful debts do not affect the receivables control account.
Again….please watch my free lectures on irrecoverable and doubtful debts.
irrecoverable debt and bad debt are different thing? If we have increase on allowance do we need to debit irrecoverable debt and then credit same amount in Trade receivable account?
We stopped calling them bad debts many years ago – we now call them irrecoverable debts.
If we increase the allowance, then we debit irrecoverable and doubtful debts expense account, and credit the allowance for receivables account. We do not touch the receivables account.You must watch my free lectures on irrecoverable and doubtful debts – I cannot type out all my lectures here 🙂
(The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well)
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