Provision for Bad debt

On periodical basis the company provides provision for the Bad debt based on the overdue balances. Bad debt will be provided whenever it is required to book in the accounts as follows:

Provision for Bad debt Expense A/c                                             Dr

              To Provision for Bad debt account (Special GL indicator)

On receipt of the payment from customer on account of invoice for which the provision is already made, the provision entry is needed to be reversed as follows:

Provision for Bad debt account A/c Dr (Special GL indicator) Dr                   

To Provision for Bad debt Expense A/c

Ageing analysis of customer balance can be done with the bad debt Provision and net of bad debt provision.