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Hi all,
I am currently studying for the level II manual bookkeeping exam but I am a little confused about the bad debt provision and how it works.
I was under the impression that if you had a provision already set up for bad debts then it would have already been charged against the previous periods p and l. In this vein any bad debts written off during the next period could be charged against the provision rather than the p&l for the period?
However, I have been struggling to make an account balance and have been advised by my tutor to include the bad debts and any increases in the provision as charges against the p&L?????
so for example in this q I have a provision of £500 already existing and must increase this to £1320, I have therefore charges £820 to the P & L, I also have bad bedts of £400 for the period, so do I charge this to the P & L as well? Or, Does it come off of the original £500 provision meaning I then have to increase the provision by £1220 to make a standing proviosion of £1320?
Any advise regarding bed debts and provisions would be greatly appreciated as I am seemingly struggling with this aspect
Thanks
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