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Okay so if there was a irrecoverable debt written off of say $600 it would recorded as:
debit irrecoverable debt expense by $600 and
credit receivables by $600But the T account in the kaplan textbook has it like this:
irrecoverable debt expense
______________________________________
$ I $
Receivables 600 I Profit and Loss 600
I
I
____ I ____
600 600why is there a profit and loss instead of balance c/f?
Is it because the expenses are not carried forward to the next period but is accounted for in the year that it occurred due to the accruals basis?
If so then why is an increase in expense (i.e increase in irrecoverable debt expense) that should be a debit figure in the profit and loss, be shown as a credit Profit and Loss figure in the irrecoverable debt expense account?
Does it just mean that it is being transferred about of the expense account to be recorded in the profit and loss account?
Thank you
damn my t account got ruined. but basically there was
a credit Profit and Loss $600 and debit of $600 in the same irrecoverable debt expense account.
_____________________________________
Receivables 600. I Profit and Loss 600
…………………….. I ………………………..But we always close off expense accounts to the Profit and Loss account!!
Credit the expense a/c and debit the Profit and Loss a/c.You clearly are not bothering to watch the free lectures!!
(And, of course, you cannot ever be required to write up any t-accounts in the exam, even though you are tested on your understanding of double entry)
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