There are some items in the balance sheet whose recovery is doubtful although those are not completely irrecoverable. It is not wise to completely ignore them or take them as completely irrecoverable. That is why a “provision” of such debts is made. These types of debts are knows are doubtful debts. These are also known as Allowance of Uncollectible debt, Allowance for doubtful account or allowance of doubtful debts.
On the other hand Band debt is such amounts that are unlikely to be paid or the creditors are not putting much effort to collect them. There can be many reasons for the formation of bad debt such as insolvency of the firm or liquidation. That is why it is important to maintain a provision from beforehand so that the firm is not badly affected by such action. It is a safety measure of the firm for such unforeseen acts.  There are different definitions of bad debts according to the accounting conventions that are followed. The provision of bad debt arises when a loan appears to be a “problem loan”.
Thus this amount needs to be either written off against the profit and loss account or a provision needs to be maintained. These are certain points that need to keep in mind while doing the Provision for bad and doubtful debt given in the Trial balance homework answer.
 Other types of provisions
The provisions for doubtful debts can be broadly classified into two types, namely the specific types of allowances and the general allowance

  1. The specific allowances-

Provision for bad and doubtful debts given in the Trial balance homework answer can be treated as a specific allowance. These allowances are done against some specific assets which are receivable but in the current accounting period facing some serious financial dispute. Such long outstanding balances can be considered under the provision for doubtful debts.  There is a difference in which these types of specific allowance are treated and the way the bad debts are treated. In the latter case, as soon as the amount of bad debts is received the ledger of bad debts is reduced to nil. On the other hand, as soon as the specific allowance is received the ledger is not completely written off. Another major difference between the two is that, the specific allowance may not for made for the entire amount. Whereas the bad debts is created for the full amount.

  1. General allowances-

The general allowances are created by scrutinizing the history of the recoverability of the bad debts. But according to the IAS 39, the creation of general allowances from the past experiences or past records are prohibited. Rather it is expected that the accountant entity should carry out an impairment review before the  f
Accounting method of provision for doubtful debts and bad debts
Provision for bad and doubtful debts given in the trial balance homework answer can be completed by the following way. The provision for doubtful debts is created by writing off the amount from the total amount that has to be received appearing in the balance sheet. At the same time a corresponding entry has to be made on the debit side. These show the potential loss. The above event can be shown through the following journal entry.
Provision for doubtful debts (expenses) ————————– (debit)
Provision for doubtful debts (balance sheet) ——————– (credit)
If the amount of the provision is same in the current period as the previous year then no entry has to be made.
Similarly, the accounting entry for the bad debts can be written as
Bad debt expenses ………..  (Debited)
To (The company’s name) ABC (let)…………. (Credited)
This is how the provision for bad and doubtful debts given in the trial balance homework answer is recorded.
How to improve in the accounting of bad and doubtful debts?
This blog provides you only with the summary of the recording of provision for bad and doubtful debts given in the trial balance homework answer. But one need to solve more sums and would need firm assistance to know more about these topics and also to learn their implications.
First and foremost to get a better understand of this topic, one should go through all the references that they are suppose go through. Remember the more your read and practice, the better you can be.
To learn more about the provision for bad and doubtful debts given in the trial balance homework answer, one uses the services of online homework assistant that are easily available. Never heard of the same? Well, these are certain sites that would provide you with the homework answer at the most affordable price. They give 100% correct answer. These services are available round the clock and the   delivery is made on time. Thus you can definitely count back on them. Another most important feature of these sites is that they give firm assistance even after delivering you the homework answers.  So hurry up and Google for your service provider today.
Apart from this, one can also take help of online tutors. These would save your time. The online tuition is available 24×7. Thus you can attend the tuition according to your convenience.
I hope this blog would be helpful and would definitely help you to under better the concept of provision of bad and doubtful debts given in the trial balance homework answer. Now you will definitely not face the difficulty in solving.

Related Post

realted post Image
Top Your Class with Expert’s Finance Homework Help
realted post Image
How Experts Can Help To Solve Advanced Financial Accounting Assessment
realted post Image
How to Make Your Finance Assignments Solved Within Tomorrow Easily
  • Payment Mode