How Do You Write off a Bad Debt Account

Direct write off method. The seller can charge the amount of an invoice to the bad debt expense account when it is certain that the invoice will not be paid. The journal entry is a debit to the bad debt expense account and a credit to the accounts receivable account.

What is the entry to write-off a bad debt?

The entry to write off the bad account under the direct write-off method is: Debit Bad Debts Expense (to report the amount of the loss on the company’s income statement) Credit Accounts Receivable (to remove the amount that will not be collected)

Do I have to pay a bad debt write-off?

If you use accrual accounting, you mark owed payments as accounts receivable. Accounts receivable is money someone owes you. When money owed to you becomes a bad debt, you need to write it off. Writing it off means adjusting your books to represent the real amounts of your current accounts.