Bad debt is an expense that a business incurs once the repayment of credit previously extended to a customer is estimated to be uncollectible

1. The Journal
Mudassir Raza

2. MAIN TOPICS
POINTS TO TALK ABOUT
Bad debts
The Journal

3. Bad debt is an expense that a
business incurs once the
repayment of credit previously
extended to a customer is
estimated to be uncollectible
S O U R C E : I N V E S T O P E D I A

4. A debt of £ 78 owing to us from H. Mander is written off as a bad debt
on 31 August 2012. As the debt is now of no value we have to to stop
showing it as an asset. This means that we will credit H. Mander to
cancel it out his account. A bad debt is an expense, and so we will
debit it to a bad debt account.
EXAMPLE

6. J. Brew, after being in business for some years without keeping proper records
now decides to keep a double entry set of books. On 1 july 2012 he establishes
that his assers and liabilities are as follows:
Assets: Van £3700; Fixtures £ 1800; Inventory £ 4200; Account Receivable- B.
Young £ 95, D,Blake £45; Bank £ 860; Cash £65 .
Liabilities: Account Payable -M. Quinn £129, C.Walters £410.

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