How do I account for bad debt for a sole trader whose accounts are set as cash basis?

Question

My client is a sole trader. His accounts are set up as cash basis. He has an invoice that was not paid and I wrote it off as a bad debt. The only problem is that the profit and loss report now shows this as an expense but, because it is cash basis, he didn't really have that expense and therefore, he also can't claim this as a deduction on his personal income tax.

How can I account for this bad debt without it showing in the profit and loss report? I want the invoice to not be "unpaid" anymore.

Thanks

JRM

Reeta Paudyal · Answer

Hi @ JRM,

Thank you for your response.

Unfortunately, my knowledge in accounting is somewhat limited, and I believe that a professional accountant would be better equipped to provide you with a precise and accurate answer to your question.

Kind regards,

Reeta

JRM · Answer

Thank you for your response. This is what I did but the Bad debt shows up in the profit and loss report. I didn't think you can claim bad debt as an expense when you account on a cash basis?

Reeta Paudyal · Answer

Hi @JRM ,

Thank you for your query .

Please find the attached KB article to write off the bad debt in Reckon one.

https://help.reckon.com/article/4cs0jtkajg-kba-5728-writing-off-bad-debts-in-reckon-one

Hope this helps.

Kind regards,

Reeta