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It may be ascertained at the end of accounting period that certain amount have been declared as bad.

The following adjusting entry will be passed :

Bad debts A/c Dr.

To Sundry Debtors A/c

The above journal entry reveals that bad debts account has been debited and it will be closed by transferring to profit and loss account. In other words, it will be posted at the debit side of profit and loss account. The item belongs to adjustment, so it will also be shown at one more place, i.e., deducted from debtors at the assets side of the Balance sheet. If there is already an item of bad debts in the trial balance further bad debts will be added to it at the debit side of profit and loss account.