Provision of Bad Debt

[Vics128]

On a Profit and Loss sheet and a balance sheet, where does the provision for Bad Debt go? Thankyou in advance

[anniebird]

On the Profit and Loss Account the provision is shown as a debit - reducing the Profit - in the overheads section.

Onthe Balance Sheet you have the debit balance under Current Assets for the total debtors outstanding and the provision is deducted from this to give the net figure you are expecting to receive.

[Vics128]

Hi anniebird thankyou so much for your help! When you say the overheads section, do you mean cost of sales or expenses?

[anniebird]

The overheads are the expenses for running the business.

You deduct the cost of sales from the sales figure to give the Gross Profit. Then you deduct all the expenses to give the Net Profit.