JE-130 Apr 2026Manualposted
Write off the uncollectible invoice.
| Account | Dimensions | Debit | Credit |
|---|---|---|---|
| 1110 Allowance for credit losses | 3,200 US Dollar | ||
| 1100 Accounts receivable | 3,200 US Dollar | ||
| Totals | 3,200 US Dollar | 3,200 US Dollar | |
Balanced.
Journal entry for writing off accounts receivable
To write off an uncollectible invoice under the allowance method, debit Allowance for credit losses and credit Accounts receivable. If the customer later pays, reinstate the receivable (debit Accounts receivable, credit Allowance) and record the cash.
- Invoice written off
- $3,200
- Entity
- Illustrative company
- Basis
- Accrual
- Currency
- USD
- Period
- April – September 2026
The worked example
A customer that owes $3,200 enters bankruptcy and the invoice is written off in April against the allowance. In September the trustee pays it in full.
Transaction · April 30, 2026
Transaction · September 15, 2026
JE-215 Sep 2026Manualposted
Reinstate the receivable on recovery.
Journal entry JE-2, 2 lines Account Dimensions Debit Credit 1100 Accounts receivable 3,200 US Dollar 1110 Allowance for credit losses 3,200 US Dollar Totals 3,200 US Dollar 3,200 US Dollar Balanced.
Transaction · September 15, 2026
JE-315 Sep 2026Manualposted
Record the trustee's payment.
Journal entry JE-3, 2 lines Account Dimensions Debit Credit 1000 Cash 3,200 US Dollar 1100 Accounts receivable 3,200 US Dollar Totals 3,200 US Dollar 3,200 US Dollar Balanced.
What the entries do to the accounts
Every entry above posted to the ledger, starting from zero balances: the net debit or credit each account is left with. Debits equal credits, so the books still balance.
| Account | Debit | Credit |
|---|---|---|
| 1000 Cash | 3,200 US Dollar | |
| 1100 Accounts receivable | 3,200 US Dollar | |
| Totals | 3,200 US Dollar | 3,200 US Dollar |
One account nets to zero across the entries and is not shown.
Why it is booked this way
Writing off an invoice removes it from gross receivables and from the allowance at the same time, because the allowance was built for exactly this loss. The balance sheet's net receivable does not move.
A later recovery reverses the write-off first, so the customer's account records what really happened, and then books the cash.
Common mistakes
- Debiting bad debt expense on the write-off when an allowance already exists.
- Writing off and forgetting to close the invoice in the AR subledger, so collections keep chasing it.
Questions
- Does a write-off hit the P&L?
- No. The expense was recognized when the allowance was built. The write-off uses up part of the allowance; net receivables are unchanged by it.
- What if a written-off customer pays?
- Reinstate the receivable and the allowance, then record the receipt against the receivable, so the customer's history shows the debt was eventually paid.
Terms on this page
Work with this entry
The tool that computes the schedule, the concept behind it, the entries that come next and the components that render them.
- Allowance for credit losses, explained for foundersAn estimate of the receivables you don't expect to collect, booked against receivables before any customer actually defaults. GAAP calls the model CECL: current expected credit losses.Doc
- Accounts payable vs accounts receivableAccounts payable is money the company owes to its suppliers; accounts receivable is money its customers owe it — a liability on one side of the balance sheet and an asset on the other.Compare
- Bad debt expense vs write-offBad debt expense is the cost of expected credit losses booked when the allowance is built; a write-off removes a specific invoice from receivables against that allowance and does not touch the P&L.Compare
- Journal entry for bad debt expenseUnder the allowance method, at each period-end debit Credit loss expense (bad debt expense) and credit Allowance for credit losses for the amount needed to bring the allowance to the expected loss on open receivables.Entry
- Journal entry for a customer refundTo refund a customer for an invoice already paid, issue a credit note — debit Sales returns and allowances, credit Accounts receivable — then pay the refund: debit Accounts receivable, credit Cash.Entry
- Journal entry for a sale on accountFor a sale on credit, debit Accounts receivable and credit Revenue for the price; under a perpetual inventory system also debit Cost of goods sold and credit Inventory for what the goods cost. When the customer pays, debit Cash and credit Accounts receivable.Entry
- AllowanceRollForwardWith the methodology shown, not just the number.Component
- AgingTableAR/AP buckets, 0-30-60-90+.Component
An illustrative company, not anyone’s real books. Every figure on this page is computed from the inputs in the example and posted by the same functions as the journal entry balancer. General information for US companies under US GAAP, not accounting or tax advice.