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A bad debt written off is considered to be uncollectable, a doubtful debt allowance is some doubt as to its collectability.
As known, a bad debt written off is as an expense shown in the income statement. It is considered to be uncollectable. A doubtful debt allowance is an amount owing to the business concerning which there is some doubt as to its collectability. It’s for purdent and reasonable and shown under the accounts receiable.
When a bad debt ocurred, the expense is written off in the bad debts expense account but this time the debt is not removed from receivables. Instead, an allowance is set up which is a credit balance. This is netted off against trade receivables in the balance sheet to give a net figure for receivables that are probably recoverable.
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