Bad Debt Expense
The purpose of this template is to determine the amount of bad debt expense that is deductible for income tax.
Entering Information
All of the information needed to determine the deductible bad debt expense is entered on the Input worksheet. The yellow highlighted cells are calculated fields, and no data should be entered in these cells. Gray cells are not calculated fields, but data should not be entered in these cells.
At the top of the input worksheet are two buttons for selecting an accounting method. Click either the Tax Basis button for income tax or cash basis books or the GAAP button for accrual based books. This selection determines the input needed to calculate the deductible amount.
Income Tax or Cash Basis Books
Enter the following:
- Uncollectible accounts as of the end of the year
- Adjustment for bad debts collected during the year
GAAP/Accrual-based Books
Enter the following:
- Allowance for doubtful accounts at the beginning of the year
- Charge-offs of uncollectibles for the year
- Recoveries
- Bad debt expense per books
- Allowance for doubtful accounts at the end of the year