Bad Debts Expense

Also known as uncollectible expense or write off
What is Bad Debts Expense

The bad debts expense account is the account where you show bad debts for the period.

How it Works

A business will make sales on credit. 

They record the debt owed for this in accounts receivable.

By doing this, the business is allowing customers time to pay.

Most customers will pay on time. 

Others won’t, though. 

Eventually, unpaid debts will be deemed uncollectible.

In this event, each customer’s debt will be written off to bad debts expense.

To see how to account for bad debt expense, press here

© R.J. Hickman 2020