those who have accounting background or knows accounting can you all please help me up?? i got some doubt in me.. i actually got a question.. i got this question from my progress test 1 which is about 1 month ago..
here goes the question..
a company found out that a receivable has been declared bankrupt. his debt has been allowed for earlier in the year.. what should i do?? who should i debit?? credit must be receivables account is it?? then debit?? is it bad debt or allowance for receivables??
i remember during my last exam i remember last time ah jie told me that it should be:
debit allowance for receivables credit receivables but my teacher told me that wrong.. it should be debit bad debt cause it became bad debtbut today when i was preparing for my tomorrow progress test 2 i bump into the same question from BPP revision kit and their answer was debit allowance for receivables.. so which one is correct?? which should i follow?? i got confuses.. can anybody please help me??
HAIZ…
Maybe is Dr Bad Debts, Cr Allowance for receivable.
ReplyDeleteSince it has been debited as an allowance before(which means probably future it will become bad debt) and need to remove it out when it eventually become a bad debt.