Bad Debt (Debit Balance)
This account is debited when an invoice credit has the option set to ‘Write-off’. The off-setting entry is a credit to receivables.
The balance in this account represents the total of receivables that were considered uncollectible and were written off as an expense. Journal entries to this account can be made if bad debt expense is being accrued for budgeting purposes. A debit to the bad debt account and a credit to the ‘other’ receivables account. If journal entries are made for this purpose, regular reconciliations to the account MUST be made and reverse journal entries performed if necessary.