Difference Between Bad Debt Expense And Allowance For Doubtful Accounts
Bad Debts Expense is the actual bad debts that is sure and certain and it is not recovered from customers. It is not an estimation. The Bad Debts Expense Journal Entry is: Bad Debts Expense a/c XXX Accounts Receivable a/c XXX (Amount Due From Customer Becomes Bad Debts Expense) Whereas Allowance for Doubtful Accounts is an estimation of Bad Debts based on the Percentage of Sales Method (Income Statement-Approach) or the Percentage of Accounts Receivable (Balance Sheet-Approach) that will prob...