When To Write Off Accounts Receivable Or Uncollectible Accounts

When it is clear that the customer will not pay his over due payments as he has been declared as bankrupt or insolvent by the court, then it is sure that at this time he is unable to pay so now it is better to Write Off Uncollectible Accounts. Although, there is still chance that he will pay, but at this time, he has failed to pay.

 

We can Write Off Uncollectible Accounts by passing following Reversing Entry:

            Allowances For Doubtful Accounts a/c     XXX

                                                                         Accounts Receivable a/c    XXX

(To Write Off Uncollectible Accounts As Customer Has Declared as Insolvent By Court)