Does Bad Debt Expense Reduce Allowance For Doubtful Accounts
No, but, in fact, Bad Debt Expense reduces Accounts Receivable . The estimated amount of Accounts Receivable that would not be recovered from customers is Allowance For Doubtful Accounts or Provision for Doubtful Debts which is a Contra Asset Account and its closing balance is deducted from Accounts Receivable on Balance Sheet . When the actual bad debts expe nse is incurred that is certain that it will not be recovered from customers, then it is recorded in Income Statement. The following entry is recorded to record bad debts expense account as shown below: Bad Debts Expense a/c XXX ...