Question

6. Journalise for Bad Debts :
Bad Debts declared but not written off 5,000.​

Answer 1

Explanation:

Bad debts means that money which we could not acquire from our debtors. We may give the goods or money on credit to our debtors. Same debtor or debtors has to give us the money of his taken debt. But when will not give the debt, it will be the loss of our business, so, we have to pass the entry for bad debts like

the entry of any other business loss. All losses account will be debited and any asset which will decrease, will be credited. In case of bad debt following journal entry will be passed

Answer 2

At times a debtor whose account had earlier been written off by a creditor as a bad debt may decide to make a payment, this is called the recovery of bad debts. While posting the journal entry for recovery of bad debts it is important to note that it is treated as a gain to the business & that the debtor should not be credited as in case of sales.

While journalizing for bad debts debtor’s personal account is credited and bad debts account is debited because bad debts written off are treated as a loss to the business and now when they are recovered it is seen as a fresh gain.

Journal entry for recovery of bad debts is as follows;