What is bad debt exspense?
submitted by Kent C. Strait

helpmeunderstand

Bad debt expense is the amount a company expects it won't be able to collect from customers. It's basically an estimate, because no one knows the future.

ronnie the rabbit runs

It's the cost of losing money to customers. You make sales, and the customer agrees to pay you in the future. The amount they all owe you goes in Accounts Receivable. A big accounts receivable number means people owe you lots of money. that's great, except, sometimes they don't pay. When they don't, the money they don't pay is called bad debt. It's recorded as an expense on your books. It shows up on the income statement.