Anybody doing Accountancy?

Question

I wld like to ask why does an Allowance for Receivables a/c have a cr balance? It sounds like an expense to me, shdn't it have a dr balance?

Answer 1

You are right. The allowance for doubtful debts expense IS an expense account, but don't forget every debit must have a credit. So where's your credit? It's the Allowance for doubtful debts a/c which is contra against the A/cs Receivable a/c. The entry is:
Dr Allowance for doubtful debts expense (expense item)
Cr Allowance for doubtful debts (balance sheet item)

Answer 2

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