Blogger Random - Recent - Specific Label Posts Widget - All in One Post Feed Widget

Accounting Treatment of Provision for doubtful debts

>> September 22, 2008

Before doing accounting treatment of provision for doubtful debts , you must know the complete definition of provision . In accounting , it is a reserve that is against loss due to non payment of debtors . In case debtor does not give us our amount . Then if we have make provision or reserve for this , we can easily purchase new goods but if we have no money due to every year bad debts then we can become insolvent . So with our work experience we should make our provision on our debtors with some % on debtor .
Now you are ready for doing the accounting treatment of provision for doubtful debts .

First of pass the journal entry of actual bad debts .

Entry for recording actual bad debt which did not record in books of business

1. Bad debts account Dr. xxxxx
To Sundry Debtors Account xxxxxx

Entry for transferring bad debts to provision for bad debts Account

2. Provision for bad debts account Dr. xxxxxx
To Bad Debts account xxxxx

Transfer of provision for bad debts account to profit and loss account

3. Profit and loss account Dr. xxxxxx
To Provision for bad debts account xxxxx

It is not necessary that provision for doubtful debt account will go only to the debit side of this account but it may go to the credit side . It will decide after making provision for doubtful debt account . Which is very easy to make . I am showing you this account . After study of this account you can easily make this account and take the benefits of this provision .

You might like:

Follow Us


TT November 13, 2008 at 5:08 AM  

Non profit debt consolidation companies are designed to help consumers get out of debt and stay out of debt by helping them to pay off all debts in a timely fashion and repair damaged credit. They also have materials available to teach clients how to make credit work for them and the strategies behind building a healthy credit rating.

Anonymous,  November 30, 2013 at 12:38 PM  

Thanx it helped

Post a Comment

About Accounting Education

An educational site with 2500+ articles, solutions, video-guides and tutorials on all topics related to accounting and finance.

Get Update on Mobile

Type in your mobile phone web browser for free access anytime, from any place.The content is designed specifically for cell phones and mobile devices.

Contact Us

Email :

Phone : +91-8557888436

Send an Email
Phone number and vCard
LinkedIn profile
Follow us on twitter