I have a client who is a money lender- licensed with the local authorities- some would say a loan shark- but there is a market out there- wonga.com!
if he lends some one £100 and charges £50 interest- the total to be repaid is £150.00- if the customer only pays him £100 back and after six months does not pay any more- there is effectively a bad debt of £50- which the lender is never going to recieve-
my question is do we show the accounts as income of £50.00 ie the interest charged- then show £50.00 as s bad debt write off!- say other overheads come to £10- then we have a loss of £10!
our client had lent out lots of small amounts and there are lots of unpaid debts- that we wish to write off- is this the correct way to show in the accounts?
if another loan was made of say £200.- the interest say is £100- total to repay is £300- if all this was paid then the income would be £100 -
is there another way to show this.