Wednesday, June 11, 2008

What is Bad Debt?

A Bad debt is all or a portion of an account receivable, note receivable, or loan that will not be collected. Management has deemed the debtor unable to pay, therefore it is a bad debt. For example, a customer who has recently declared bankruptcy would have his accounts receivable considered bad debts.

Accounting Examples about Bad Debts:
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Percent of Accounts Receivable Method for Estimating Bad Debts Expense
Percent of Sales Method to Calculate Debt Expense

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The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.