Writing off Bad Debts

MMMM Member Posts: 116
edited February 2017 in Accounts Hosted
This is probably an easy one, but not one I've done before.

We have some old invoices going back 2-3 years for which we never received payment.

I've been asked to write them off. What is the journal entry, please? Is it just as simple as Dr Bad Debts / Cr Accounts Receivable?


Comments

  • gazza73gazza73 Accredited Partner Posts: 1,432 ✭✭
    edited February 2017
    MM

    That'd do it.   Get you GST set too, so that the GST that you originally collected and handed over 3 years ago, can be claimed back as a GST credit to your favour.   The DR to Bad Debts in P&L will provide the claimable business expense (offset to the original income) OK.    

    Add that CR to settle the A/R  will effectively knock off your prior expectation of a payment ever coming from the offending debtor.

    Gary


  • MMMM Member Posts: 116
    edited January 2017
    Sweet, thank you!
  • MMMM Member Posts: 116
    edited January 2017
    Is there a specific journal entry to claw back the GST?
  • gazza73gazza73 Accredited Partner Posts: 1,432 ✭✭
    edited February 2017
    MM

    If intent on using a Journal Entry,  split the bad debt into nett and GST amount, and make a three line journal as original planned,  but split the expense (NETT) to the P&L,and the GST portion to the balance sheet to the Tax Payable account that you use for your BAS.  (the thrid line is to GROSS amount CR to the Accts Receivable)
  • Graham Taylor AutomotivesGraham Taylor Automotives Member Posts: 43
    edited September 2016
    Hi, 

    I did this exactly as explained above and even double checked the help guide in Reckon to make sure I had this right. However my journal will not save and says that it is unbalanced. Have I missed something?

    Thanks
    J
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