Do you add allowance for doubtful accounts to bad debt expense?
Andrew Campbell
Updated on February 17, 2026
Accounting for a Doubtful Debt The debit in the transaction is to the bad debt expense. When you eventually identify an actual bad debt, write it off (as described above for a bad debt) by debiting the allowance for doubtful accounts and crediting the accounts receivable account.
How do you record allowance for doubtful accounts and bad debt expense?
The three primary components of the allowance method are as follows:
- Estimate uncollectible receivables.
- Record the journal entry by debiting bad debt expense and crediting allowance for doubtful accounts.
- When you decide to write off an account, debit allowance for doubtful accounts.
How do you classify bad debt expense?
Bad debt expenses are generally classified as a sales and general administrative expense and are found on the income statement. Recognizing bad debts leads to an offsetting reduction to accounts receivable on the balance sheet—though businesses retain the right to collect funds should the circumstances change.
Is bad debt expense a debit or credit?
When accountants record sales transactions, a related amount of bad debt expense is also recorded. This is recorded as a debit to the bad debt expense account and a credit to the allowance for doubtful accounts.
What is the difference between bad debt expense and the allowance for bad debt?
What is the difference between bad debt expense and the allowance for bad debt? The allowance for bad debt or the provision for doubtful accounts is a valuation account that represents an estimate of the amount of receivables that a company does not expect to collect.
How is bad debt expense recorded in a journal?
Estimate uncollectible receivables. Record the journal entry by debiting bad debt expense and crediting allowance for doubtful accounts. Allowance for Doubtful Accounts The allowance for doubtful accounts is a contra-asset account that is associated with accounts receivable and serves to reflect the true value of accounts receivable.
What is the difference between bad debt and doubtful debt?
Some people will use these terms or account titles interchangeably: Bad Debt Expense, Doubtful Account Expense, Uncollectible Account Expense. The same for these terms or account titles: Allowance for Bad Debts, Allowance for Doubtful Accounts, Allowance for Uncollectible Accounts. The “Allowance for …” is a balance sheet account.
When do you write off a bad debt?
The debit in the transaction is to the bad debt expense. When you eventually identify an actual bad debt, write it off (as described above for a bad debt) by debiting the allowance for doubtful accounts and crediting the accounts receivable account. Example of a Bad Debt and Doubtful Debt
