Accounting and Finance for Lawyers
Receivable
To match the expected bad debt of accounts receivable, a contra account for such allowance should be created.
When debts actually become bad, the contra account is closed and removed from the Accounts Receivable account.
Example
| Account | Debit | Credit |
| Accounts Receivable | 100000 | |
| Fee Revenue | 100000 | |
| Uncollectible Accounts Expense | 4000 | |
| Allowance for Doubtful Accounts | 4000 | |
| Allowance for Doubtful Accounts | 4000 | |
| Accounts Receivable | 4000 |