8 thoughts on “Accounting For Uncollectible Accounts [Bad Debt]”

  1. I was just wondering as to what amount between the provision for doubtful and the actual bad debts will be used in the calcutions of debtors in the cashflow statement?

  2. Gidday Collen,

    As far as cash flow statement concern, unlike a cash forecast analysis [which is based on prediction], it is suppose to be a “real-happening-transaction” relate to the cash [in and outflow]. Meanwhile, provision for doubtful of receivable is based on prediction. Therefore, there is no need to care about the provisions. One should simply put the “provisions for doubtful” off the cash flow statement, and put “whatever uncollectible [actual bad debts]” in instead.

  3. How do you record recovery of bad debt that was written off a few years ago. We had a receivable and corresponding allowance account that was netted to clean the b/s at time of ownership change. Partial recovery was then made on written off a/r. Is this now Misc Inc or is it Bad Debt recovery (negative expense)?

  4. Neil Clark,

    If the bad debt was netted [written off] after the ownership transfer, then you may use either one. But if the receivables were acquired on the net value, then you should not recognize it as “bad debt recovery”, otherwise it will become odd for you [your organization] did not book any bad debt in the past period.

  5. On my AR schedule, I have 2%, 7%, 15%, 27% allocated as allowance percentages for 0-30, 31-60, etc. These percentages were carried forward from prior years, but I’m not entirely sure whether they are accurate. How do I know whether these allowance percentages are reasonable to be relied upon to calculate estimated uncollectible expense?

  6. Putra, you wrote:
    DR Accounts receivable 600
    CR Allowance for bad debt 600
    DR Cash 600
    CR Accounts receivable 600
    But what about:
    DR Allowance for bad debt 600
    CR Bad debt expense 600
    Shouldn’t we make this additional adjustment.

  7. I received a payment for a bad debt write off after the fiscal year-end. I have to submit the tax that I am recuperating from the client. Should I create a new invoice or just post the payment through the general?

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