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John Moffat.
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gaeunn
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Hi, May I clarify one doubt regarding writing off debt and allowance for receivables. To create allowance, we debit irrecoverable debt expense and credit allowance for receivables. To write off debt, we debit irrecoverable debt expense and credit receivables. If an allowance was previously created for a receivables which was later deemed irrecoverable and written off, the irrecoverable debt expense is then recorded 2 times. Isnt that wrong
John Moffat
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In future you must ask in the Ask the Tutor Forum if you want me to answer. This forum is for students to help each other.
The new allowance required will not include an amount for the debt that has been written off. Therefore the allowance will reduce and we debit allowance and credit irrecoverable debts. The expense is not therefore recorded two times.
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