bad debts and provision for bad debts呆账坏.pptVIP

Bad debts and Provision for Bad debts Bad Debts When the firm finds that it is impossible to collect a debt, that debt should be written off as a bad debt. Accounting Entries: Example During the year, a company sold goods for $2,000 to Mr. Lee, $1,500 to Mr.Wong and $300 to Mr. Wu. Mr. Lee and Mr. Wong paid the company $800 and $1,000 respectively Later, Mr. Wong and Mr. Wu became bankrupt, and it is impossible for the company to collect these debts. The company decided to write these off as bad debts. B. Provision for Bad / Doubtful Debts A provision for bad and doubtful debts may be made wh