![]() ![]() The same thing happens to companies as well. Sometimes people encounter hardships and are unable to meet their payment obligations, in which case they default. Companies cannot control how or when people pay. Why? This is because it is hard, almost impossible, to estimate a specific value of bad debt expense. It would involve the following entry:Īs mentioned earlier in our article, the amount of receivables that is uncollectible is usually estimated. Sometimes, people or businesses pay back the amount but at a later date, which means that you need to reverse the write off you made and record the collection of the receivables.
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