69 – Bad Debt

Operating Expenses

 

Synopsis

Account 69

Debits

Credits

  1. Month-end adjustment to increase the balance in Allowance for Doubtful Accounts –  (Account 340). 

  2. The amount of the direct write-off of a bad debt when no reserve has been provided.

  1. Month-end adjustment to decrease the balance in Allowance for Doubtful Accounts –  (Account 340).

  2. Collection by agency, or other means, of an account previously written off.

 

Remarks:

Proper credit investigation and approval will minimize potential bad debt losses.

Where accounts are collected by a credit and collection agency, the portion of the account that is retained by such agency should be charged to Outside Services (Account 68).  The total amount collected should be credited to the individual's account.

For departmentalization purposes, bad debts expense should be distributed to the operating department that received credit for the applicable sale.

Write-off of uncollectible receivables should have prior approval of appropriate retailer management.

Note: