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• # 109066
• Thu 11 Jun 2015 01:58 PM

Hi all

When your bad debt decreases, what adjustment you need to enter please?

I think:

Bad debt prov (BS) DR (decreased amount)

Bad debt prov (P&L) CR (decreased amount)

Please can you let me know if its correct?

Many Thanks

Anna

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• # 109068
• Thu 11 Jun 2015 03:47 PM

Yes Anna, that is correct. Good news for the client as a doubtful payer has turned up good.  

Please be aware that the term "provision" only applies to the balance sheet descriptive code; the P&L code should be called plain "bad debts written off" as it expenses movements in the provision each year.

• Kind regards,
  PeteL  

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• # 109069
• Thu 11 Jun 2015 04:16 PM

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• # 109077
• Thu 11 Jun 2015 07:18 PM

Hello Anna,

The last part of your latest post is  the correct entry to make to decrease the bad debt provision

1104 Bad Debt provision DR 375.00                      - reduces the balance sheet provision for non paying customers

8100 Bad Debt Written off CR 375.00                    - increases profit because a debt has been paid unexpectedly

Hope that explains what the journal entry is achieving. Apologies if my first answer was confusing you.

• Kind regards,
  PeteL  

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• # 109089
• Fri 12 Jun 2015 11:44 AM

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• # 109090
• Fri 12 Jun 2015 11:47 AM

AnTa said:

“

 

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