How To Write Off An Uncollectible Accounts Receivable
Writing Off An Uncollectible Accounts Receivable means that when the company sold goods to customers on Credit Basis, then some customers may not pay on time or it is possible that some unpaid invoices become Uncollectible or becomes Bad Debts Written Off . Whe n an account becomes uncollectible, then it must be written off by debiting Actual Bad Debt Expense And Crediting Accounts Receivable / Sunday Debtor . For Example, If ABC Company sold 5 chairs to Mr. A for Rs. 50000, 3 Fans to Mr. B for Rs. 60000. Then, if on due date, Mr. B fails to pay on time and he also unable to pay for the amount of one Fan (Rs. 20000). This amount becomes Bad Debts for the company. The Accounting Journal Entry is shown below as:- Bad Debts Written Off a/c 20000 ...