Bad debt provision p&l travers biography

A customer has been invoiced a total of 500 for goods and the business has decided that there is doubt as to whether the customer can pay in full. They have decided to make a bad debt provision (allowance for doubtful accounts) against the debtor of 200.

The original invoice would have been posted to the debtors control, so the balance on the customers account before the bad debt provision is 500.

A provision for bad debts is recorded in the accounting records as follows:

Journal Entry for the Bad Debt Provision

The accounting records will show the following bookkeeping entries for the bad debt write off.

Bad Debt Provision Bookkeeping Entries Explained

Debit
The provision for the bad debt is an expense for the business and a charge is made to the income statements through the bad debt expense account.
Credit
The amount owed by the customer is still 500 and remains