Writing off irrecoverable debts in accounting

Steps:

• Recognize the transaction: Shilpa identifies Tahir's debt as uncollectible on 31 March 2025.
• Apply double-entry principle: Debit an expense account for the loss and credit the asset account to reduce receivables.
• Specify accounts: Debit Irrecoverable Debts (expense) and credit Tahir's account (debtor) to write off the amount.
• Confirm timing: Entry occurs on 31 March, within the financial year ending 30 April.

Why C is correct:

• Per accrual accounting rules, writing off bad debts debits Irrecoverable Debts expense and credits the specific debtor account (Tahir debts) to reflect the loss and remove the receivable.

Why the others are wrong:

• A: Reverses the entry, incorrectly increasing both expense and debtor balance.
• B: Debits Tahir (increasing receivable) and credits expense (reducing loss), opposite of write-off.
• D: Identical to B, wrongly increasing the debtor and reducing the expense.

Final answer: C