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Bad Debts and Provision for Doubtful Debts

Bad Debts and Provision for Doubtful Debts

Author: Jamshed Ali

Outlines and details the concept of:

  •  Bad Debts as one of the confirmed losses a business needs to recognize in the period it happened;
  • and the Doubtful Debts ie an expected future loss that needs to be provided for in order to report the financials in a prudent manner.

From the concept to calculation/measurement to Journalizing to posting to ledger to lisiting in the trial balance and to the ultimate presentation in the financial statements. A step by step approach.

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Introductory/Welcome Session

As Slam o Alikum and Good Morning.....

Welcome to our first session. We intend this session to be an introductory one and get to know each other before we formally begin. Today we will try to agree on:

  • Rules of your part and my part in terms of academics and more importantly in terms of learning to learn....
  • Usual work routines (departure from those routines will an exception and not a norm)....
  • Our connection inside the class room and flexibility of working and getting in contact on the go (

Source: My Year 10 Class and Myself...

CIE Syllabus Y2015 (Specification Code 0452)



Bad Debts and Factoring 2

Bad Debts and Factoring

Shows how factoring could cover the risk of bad debts....

Credit Policy Intro...

Video to get you going on the topic...


New Terms

  • Bad Debts
  • Bad Debts Recovered
  • Doubtful Debts
  • Provision for Doubtful Debts
  • Bankruptcy/Insolvency
  • Past Due/Over Due
  • Ageing Schedule (of Trade Receivables)
  • Credit Policy
  • Debt Factoring
  • Debt Collector


Source: Self

intro audios 4

Provision for Doubtful Debts


Mind Map for Bad and Doubtful Debts

Source: Self


Journal Entries (J/E's) for Bad Debts

Source: Self


Source: (modified and adapted)

Past Exam Papers Questions

NOTE: The link above is for the teachers access. Students need to look up the particular exam/question listed below and find it on or on etc...

S14P12Q1(g)              P4DD and Concepts

S14P11Q1(c)             Calculating how much a TR owes before dealing with BD/P4DD (CW1)

S14P11Q3(a,b)           Structured Question on making ledger accounts for BD, BDR and P4DD + Concepts

S13P11Q1(a)             TRs and Business Documents (CW2)

S13P11Q4                 To be adapted to think of a TR a/c (dr and cr), P4DD (calculation, J/E) + Concepts 

​S13P11Q6(b)             BD calculation from IRs (Q*) 

S13P12Q1(d)             BD calculation (CW1)

S13P12Q3                 A Mixed one, TRs a/c, Business Docs, trading vs. service businesses + Concepts(CW2)

​S13P21Q2(c)            P4DD Transfer/Closing J/E (P4DD to P/L)