How To Treat Bad Debts Written Off In Profit And Loss Account

Bad Debts Written Off are actual bad debts which is an actual loss to the company / corporation as you could not recover the amount of Credit Sales from those customers who failed to pay for goods sold or services rendered on account. So, the journal entry to record is to debit Bad Debts Account and credit Accounts Receivable Account.

Treatment Of Bad Debts Written Off In Profit And Loss Account / Income Statement And Balance Sheet

So, the effect of Bad Debts Written Off is on Profit And Loss Account is that we record it as an expense or loss in Profit and Loss Account and deducted the amount from Accounts Receivable or Sundry Debtors on Balance Sheet / Statement Of Financial Position.