You have just received a notice that one of your customers with an accounts receivable balance of $100 has gone bankrupt and will not be making any future payments. assuming you’re using the grant method, the input you make is for nothing. bad debts charges and provision for bad debts. B debit bad debts and credit accounts receivable. vs. provision for debit for bad debts and accounts payable. D. Provision for bad debts and bad debts
C. Allowance for Debit for Bad Debts and Credit for Trade Receivables. Explanation: In the accrual method, the company makes an entry at the end of the accounting period as an anticipation of bad debt, the entry is debited with an expense for bad debt and a credit to the provision for bad debts, when a customer’s credit is written-off as uncollectible for the company to use the bad debt provision recorded to offset the amount of the customer’s default.
Bad Debt Debit Allowance $100 Credit Accounts Receivable $100 Explanation: When a business makes sales on credit, it debits accounts receivable and sales on credit. Depending on the assessment, some or all of the receivables may be uncollectible. To account for this, debit bad debt expenses and the allowance for bad debts. If the debt becomes uncollectible (i.e. becomes uncollectible), provision for bad debts and receivables.
When a previously deemed invalid debt is settled, debit money and credit bad debt expenses.