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Receivables

Accounting for irrecoverable debts

2.1 Accounting for irrecoverable debts

When it becomes clear that a customer is unlikely to pay, the receivable balance
must be removed (since it is no longer an asset) and transferred to the statement of
profit or loss as an expense for the period. This may also be referred to as a bad
debt.

The double entry to record an irrecoverable debt is:

Debit Irrecoverable debts expense account

Credit Receivables

Tutor notes guidance – discussion points

Take students through TYU 1 from Chapter 11 of the Study Text.

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