What is the difference between provision for bad debts and reserve for bad debts?

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Solution

The difference between provision for bad debts and reserve for bad debts is that provision for bad debts is a value that is set aside for meeting possible expenses in the future or any reduction in the value of the asset.

The reserve for bad debts is specifically that part of profit that is set aside for meeting the bad debts.

Also read:

What Are Reserves in Accounting

What Is Reserves

Difference Between Capital Reserve and Revenue Reserve

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Q. The entry for creating a provision for bad debts is:

Q. The entry for creating a provision for bad debts is ___________.

ease explain the treatment of bad debts , new bad debts,provision for doubtful debts, bad debts written off in preparation of final accounts.

Q. Prepare the bad debts account, provision for bad debts account, profit and loss account and balance sheet from the followii information as on December, 31, 2011.
(Rs.)
Debtors 80,000
Bad Debts 2,000
Provision for bad debts 5,000
Adjustments
Bad debts Rs. 500, Provision on debtors @ 3%.

Prepare the bad debts account, provision for bad debts account, profit and loss account and balance sheet from the following information as on December 31, 2011.

Rs.

Debtors 80,000

Bad Debtors 2,000

Provision for bad debts 5,000

Adjustments:

Bad debts Rs. 500, Provision on debtors @ 3%.

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