(坏账准备).ppt

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1、BusinessFinanceWeek6(2)AdjustmentsforfinancialstatementsDepreciationoffixedassetAccrualsandPrepayments1BaddebtsBaddebts(坏账）:customersareunabletopaytheamounts(partoftheamounts)owedtothebusinessBaddebts:ExpensesintheprofitandlossaccountDebtor’saccount:re

2、ducebytheamountofthebaddebts,decreaseofassetEg.Writeoffbaddebts.RShawowedus￡375,buthecanonlypay￡125cash,￡250beingbaddebts(1)Cash:Dr.Cash125Cr.Debtors125(2)Baddebts:Dr.Baddebtsexpense250Cr.Debtors2502ProvisionfordoubtfuldebtsAfterthebaddebtswrittenoff,d

3、ebtsnotpaidbytheyearendProvisionfordoubtfuldebts(坏账准备):It’slikelythatsomeofthedebtsoutstandingwillfinallyprovedtobebaddebts,butcannotbesureatthetimebeingPrudenceconcept:theabovepossibilityshouldbereflectedinthefinancialstatementinthecurrentperiod2aims:

4、(1)chargeasanexpenseintheprofitandlossaccountforthatyearanamountrepresentingdebtsthatwillneverbepaid(2)showinthebalancesheetadebtorsfigureascloseaspossibletothetruevalueofdebtorsProvisionfordoubtfuldebts:↑expense,↓asset(debtors)3AccountingentriesforPro

5、visionfordoubtfuldebtsProvisionfordoubtfuldebts:shownaspercentageofthetotaldebtsafterdeductingbaddebtsDr.Doubtfuldebtexpense(profitandlossaccount)Cr.Provisionfordoubtfuldebts(decreaseofDebtors)Eg.31Dec,thedebtorsfigureafterdeductingbaddebtswas￡10,000.2

6、%estimatedtobebaddebts–ProvisionProfit&LossAccount31DecBalanceSheet31DecGrossprofitCurrentassetsLessExpenses:Debtors10,000DoubtfuldebtsexpenseLessProvisionfordoubtful200debts(200)4BaddebtsandProvisionfordoubtfuldebtsTwodifferentaccountsinexpensesanddeb

7、toradjustmentsBaddebts:whenadebtisbelievedtobeirrecoverableandiswrittenoffProvisionfordoubtfuldebts:estimatesoftheamountofthedebtorsremainingattheyearend(afterthebaddebtshavebeenwrittenoff)thatarelikelytofinishupasbaddebtsProvisionfordoubtfuldebts:also

8、refertoas‘Provisionforbaddebts’5IncreasingtheprovisionEg.Continued:attheendofthefollowingyear,debtorsrisento￡12,000,provisionrateremainsat2%,provisionfordoubtfuldebtsneededtobeincreasedfrom￡200to￡240￡200provisionboughtforwardfromtheprev