Bad Debts

 Bad Debts

To record a bad debt when a customer cannot pay, you debit the Bad Debts account and credit the specific customer's account (Sundry Debtors or Accounts Receivable).

    Core Bad Debt Journal Entry

Debit: Bad Debts Account (Expense) 
Credit: Customer's Name / Accounts Receivable (Asset)
Effect: This removes the uncollectible amount from your active receivables and records the loss. At the end of the year, the Bad Debts account is closed by transferring it to the Profit and Loss Account. 
Subsequent Recovery of Bad Debt
If a customer pays an amount that was previously written off as a bad debt:
Step 1 (Re-establishment):
• Debit: Customer's Name / Accounts Receivable
• Credit: Bad Debts Recovered Account (or Allowance for Doubtful Accounts) 
Step 2 (Cash Receipt):
• Debit: Cash / Bank Account
• Credit: Customer's Name / Accounts Receivable
Websites:
https://www.highradius.com/resources/Blog/bad-debt-expense-journal-entry/
https://www.learnsignal.com/blog/journal-entry-of-provision-for-doubtful-debts/
Oracle Fusion Accounting Entries for Bad Debts
✅ Record bad debts in Oracle Fusion Cloud Financials by performing a direct write-off in Accounts Receivable (AR) or posting a manual journal entry in General Ledger (GL). 
Standard Accounting Entries
Provision/Allowance for Doubtful Accounts (Accrual):
• Debit: Bad Debt Expense (Income Statement)
• Credit: Allowance for Doubtful Accounts / Provision for Doubtful Debts (Contra-Asset/Liability) 
Direct Write-Off (When debt is uncollectible):
• Debit: Allowance for Doubtful Accounts (or Bad Debt Expense if no allowance used)
• Credit: Trade Accounts Receivable (Customer Balance)
How to Process in Oracle Fusion AR (Recommended Method)
🔎 Navigate to Receiv
nated Bad Debt or Write-Off receivables activity type.
✅ Complete the adj
ables > Billing or Collections work area.
🗓 Select Manage Adjustments or go to the specific customer transaction/invoice.
📌 Create an Adjustment activity where the receivables amount is reduced, mapped to your desig
ustment; Oracle Fusion automatically generates the accounting entries distributing the amount to the assigned Bad Debt expense/allowance and clearing the customer's invoice balance.
How to Post a Manual GL Journal Entry
🔎 Navigate to General Ledger > Journals > Create Journal.
🗓 Fill in the header details (Batch, Ledger, Accounting Period, Currency).
📌 Enter the lines:
• Debit Line: Bad Debt Expense Account (e.g., 7730)
• Credit Line: Accounts Receivable / Allowance Account (e.g., 1260) [1]
✅ Save and post the journal




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