Why reserve for doubtful debts [ RDD old] are subtracted from total of Bad debts(old)+ Bad debts (new) + RDD (new)
bad debts (old) = 1000
bad debts (new)= 200
R.D.D. (new)=400=1600
R.D.D. (old)= -1000
=1000
how???
Answers
Answer:
because , we can made provision every year to cover the doubtful debts in the business. some time the balance of made provision is remaind after performed all adjustment .so, then it is used in the next year. okkay
Answer:
The reserve for doubtful debts [ RDD old] are subtracted from total of Bad debts-R.D.D. (new)=400=1600
Explanation:
Bad debt, also known as uncollectible accounts expense, is a sum of money owed to a creditor that is likely to go unpaid and for which the creditor is unwilling to take action to collect for a variety of reasons, frequently because the debtor lacks the funds to do so, for instance because a company is going bankrupt or into liquidation.
When a company manages its credit and collections process ineffectively, it results un a high bad debt rate.
A business runs the danger of having a high bad debt rate if the credit history of a new customer is not thoroughly checked or the collections team is not actively contacting customers to recover payments.
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