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Income Statement question

  • 18-02-2014 11:59AM
    #1
    larfie
    Registered Users, Registered Users 2 Posts: 6 ✭


    Hi guys, I'm hoping some of you may be able to help me out here.

    I'm a little confused on an aspect of the income statement regarding bad debts and a provision for.

    When entering data into the income statement, do I include both the bad debts written off and the provision for bad debt?

    Do I not subtract the bad debt from the provision when including it?


Comments

  • #2
    Alan Shore
    Registered Users, Registered Users 2 Posts: 735 ✭✭✭Alan Shore


    At the start of the year you will have your provision for bad debts in your balance sheet.

    If you decide to write off some of these then the debit goes to bad debt provision ie you provided for the bad debt last year.

    If you are writing off the bad debt from the current years sales then it goes firstly to the income statement as does the increase in the bad debt provision for the current year.


  • #3
    larfie
    Registered Users, Registered Users 2 Posts: 6 ✭larfie


    Thanks Alan. That clears it up for me. The book I'm studying from is quite ambiguous.


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