How can I make a "Provision for doubtful debt"

I want to make a Provision for doubtful debt which will net the Account receivable figure and also disclosed in the Profit and lose statement as an expense. Is there a way to do this in Manager?

The way to do this is to simply create two new general ledger accounts:

  • Provision for doubtful debt (expense)
  • Less: Allowance for doubtful debt (asset)

I think that’s the correct way to call those accounts.

Then make journal entry to debit expense and credit asset.

Maybe in future, this will be in-built feature so you don’t have to do it through journal entries.

That it i guess. An in built one will be okay. but provisions are usually once in the year entry when publishing accounts so i think the journal entry is okay for now

Do we have something on providing provisions…

The question is, how would you expect in-built feature to work? Set somewhere something like 10% of accounts receivable balance to be doubtful debts and let Manager to make automatic entries?

Let me put across the situation … We sometimes know that a specific amount or an approximate amount has to be paid for some service/ job work etc that is already done, but we would not have received actual documents to effect that transaction under accounting.

In such case we may have to have a provision, where in we book this as an expense ( provisional) and at later stage get it regularised with necessary documents.

This will reflect as provision in P&L/ Balance sheet etc and taxation is calculated accordingly.

May be very useful during annual account closing.

U decide what works best for this …

Still we have to do the same for treating bad debts or in built feature for doubtful debt has been added in newer version?

@Tut your say about doubtful debts?

There is no automatic or built-in feature for bad debts.

By the way, @Muhammad1, I am not a developer of this software. I am just another user.

1 Like

@Tut yeah brother i know but the reason for tagging you is your knowledge about this software and your prompt reply :slightly_smiling: