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    2bawallaby's Avatar
    2bawallaby Posts: 2, Reputation: 1
    New Member
    		  
    #1

    May 2, 2009, 07:41 PM
    Bad debts in Budgeted Income Statements
    Hi there, I am doing a Budgeted Income Statement. If there is a percentage of credit sales that will not be received therefore bad debts, should this be shown. From my readings, I understand that this will decreased the projected funds coming into the business, so I assume that they would have to be calculated.

    If it does, does it come off the Sales figure as in a cost of sales, which would thereby reduce the gross profit; OR
    Does it come off the operating expenses - I think no, however obviously could be wrong.

    I would appreciate thoughts in relation to this.

    Thanks
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
    Ultra Member
    		  
    #2

    May 3, 2009, 03:31 AM

    Provision for Bad Debts is not part
    Of the Trading Account.
    It is another operating expense , budgeted for in the Profit and Loss Account.
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