Scenario:
You
work for Jules Ltd and a customer’s invoice of £440 has been outstanding for
over 1 year and management have decided to write this off as bad debt and the
company is not VAT registered.
Double entry posting:
DR:
Bad Debt account £440
CR:
SLCA/ Debtors accounts £440
Reason:
In
writing off a debt, the business is incurring a cost and this is an expense
which is increasing, so it has to be debited.
The
debtors outstanding balance now has to be reduced because we are writing off the
full outstanding debt and this reduces the debtors balance.
REMEMBER:
DEAD/CLIC
N/B:
SLCA
is also called Debtors Control Account/ Trade Receivables Account
Yours Sincerely,
The Friendly Team
The Training Place of Excellence Limited
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