Bad Debt Expense

What is a Bad Debt Expense?

For a business a bad debt expense occurs when an amount due from a customer, usually called an accounts receivable or trade debtor, proves to be irrecoverable and needs to be written off in the accounting records.

The journal to record the bad debt expense adjusting entry would be as follows:

Bad Debt Accounting Journal
Account Debit Credit
Bad debt expense XXX
Accounts receivable XXX

Bad debts are shown in the income statement and as part of operating expenses, and reduce the net income of the business.

Our tutorials on accounting for bad debts provide additional information on bad debts written off.

For further information on bad debts see the Wikipedia definition.

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Last modified August 24th, 2016 by Team

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