Accounting For Provision For Doubtful Debts

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Accounting for Doubtful Debts. Allowance for doubtful debts is created by forming a credit balance which is netted off against the total receivables appearing in the balance sheet. A corresponding debit entry is recorded to account for the expense of the potential loss. Accounting entry to record the allowance for receivable is . A business typi.y estimates the amount of bad debt based on historical experience, and charges this amount to expense with a debit to the bad debt expense account which appears in the income statement and a credit to the provision for doubtful debts account which appears in the balance sheet ..