Bad Debt

Where do you record bad debt?

Hello,

Thank you for your question.

Bad debt is recorded on the Profit and Loss statement as an expense under Bad Debt Expense or Write-Offs.

However; Bad Debt is only recorded as an expense if the income was already recorded.

This typically only would happen if you are an accrual basis company and recorded the income when incurred as opposed to a cash basis company who records income when received.

Bad Debt

by Lisa
(SC USA)

Our business makes the following entry when a sponsorship is agreed upon. We debit Accounts Receivable and credit Deferred Revenue Sponsorships. I have an account that is uncollectable. I have made an entry to debit Bad Debt and credit Accounts Receivable. I need a debit to clear the Deferred Reveneue. What is the offsetting credit?