Year 12 Accounting

Revision Lesson
Writing off an Irrecoverable Debt
What is an irrecoverable debt?
An irrecoverable debt occurs when a business is
owed money by a customer (a trade receivable) and
the business has evidence to suggest that the
customer will never pay the amount owed.

It is therefore prudent (remember the accounting

concept?) to write off the debt, so that it is no longer
classed as an asset, but instead as an expense
What is the double entry?
The double entry to write off an irrecoverable debt
is:
Debit Irrecoverable debts written off
(expense)
Credit Customer account
(to reduce the trade receivable asset)
Be careful…
There are two ways that you might be told about an
irrecoverable debt:
1) The irrecoverable debt might already be shown in the
trial balance.
If this is the case, the double entry has already been
done and you don’t need to make any further adjustment
2) The irrecoverable debt might be referred to in the
“additional information”. If this is the case, then you need
to make the adjustment to the trade receivable figure

I’ll use the textbook to show you what I mean…

Textbook Examples
Textbook Question 12.10 (page 230)
Here the irrecoverable debt is shown in the trial
balance; the trade receivable figure of £23,641 does
not need to be adjusted

AQA Question Bank Ch 12 Q4 (Page 47)

Here the irrecoverable debt is shown in the additional
information; the double entry has not yet been done;
so the trade receivable figure of £3,540 will be
reduced by £240 to give £3,300