GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If bad debts appear as an adjustment outside the trial balance, then it is adjusted
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By debiting to bad debts only
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By debiting to sundry debtors only
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By debiting bad debts account and crediting sundry debtors account
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By debiting to sundry debtors account and crediting to bad debts account
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Explanation:
Detailed explanation-1: -Recording bad debt involves a debit and a credit entry. Here’s how it’s done: A debit entry is made to a bad debt expense. An offsetting credit entry is made to a contra asset account, which also referred to as the allowance for doubtful accounts.
Detailed explanation-2: -To record the bad debt entry in your books, debit your Bad Debts Expense account and credit your Accounts Receivable account. To record the bad debt recovery transaction, debit your Accounts Receivable account and credit your Bad Debts Expense account. Next, record the bad debt recovery transaction as income.
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