How to record credit losses/bad debts recovered
ID:CVCLRE

Video Overview

A credit loss, also known as a bad debt, is written off by making a journal entry in the general journal that affects the credit loss account, the VAT input account – as VAT is allowed to be claimed to lighten the burden – and in the debtors control account. The credit loss account and VAT input accounts are debited and the debtors control account is credited. Occasionally, it may happen that some money is recovered from a debtor even though the amount has previously been written off, with the account balance of the debtor’s account having gone back to zero showing in your books that the debtor no longer owes you money. This tutorial deals with how you go about recording the recovery of credit losses, or bad debts as they are sometimes known.