Debtors are to be reviewed every 12months and an Allowance for Doubtful Debts is to be calculated at 5% of the final Debtors balance for the period (excluding GST and any Bad Debts written off)

Accounting Nov 08, 2020

Debtors are to be reviewed every 12months and an Allowance for Doubtful Debts is to be calculated at 5% of the final Debtors balance for the period (excluding GST and any Bad Debts written off).
Bad debts are to be written off when debts are deemed “bad”. For a debt to be “bad” it must satisfy either criteria below:

Uncollectable: the overdue debts procedure is followed, and the debtor is uncontactable, or bankrupt, or
Uneconomic to Recover: the amount of the debt is $1,000 or below.