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Question

What is the journal entry to write off a loan to a company?

Submitted: 308 days and 6 hours ago.
Category: Finance
Value: $9
Status: AWAITING EXPERT REPLY
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Optional Information

London, United Kingdom

Posted by Cassandra 308 days and 5 hours ago.

Info Request

Hello peterd and welcome to just answer.

is the journal entry for the company making the loan? Was the loan paid off or is it a bad debt write off?

308 days and 5 hours ago.

Reply

Hello Cassandra. Many thanks for your help. Yes - the journal entry is for the company. Originally, the company was loaned £1000.00 by a "friend". The original entry was posted DR cash CR loans. The "friend" has written off the debt. What is the posting now?

Answer

Since the friend did not pay back the loan this is considered as a bad debt expesne.

The entry to record this is a cr to cash and a Dr to bad debt expense.

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Expert: Cassandra
Pos. Feedback: 100.0 %
Accepts: 
Answered: 1/18/2009

Accountant

10+ years in the accounting field. BS degree in accounting

308 days and 5 hours ago.

Reply

You have misunderstood me - sorry. The friend lent the money to the company and does not want to be repaid. The company accounts reflect the loan as a credit balance. In the company accounts, what is the journal entry now? I hope this helps you.

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