How to write off Bad Debt

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Leanne_7663246
Leanne_7663246 Member Posts: 111 ✭✭
edited January 2017 in Accounts Hosted
hi 
I have a couple of invoices that I want to write off as bad debts. I have done a journal entry where I credit AR for the gross amount and debit bad debt splitting the nett and gst.  Following the instructions in the hosted version it says to pay off the invoice using the credit created. I did this and the invoice shows as paid however the credit stays there.  I have deleted it all and re entered and still have the issue. Does anyone have any suggestions

thanks in advance

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  • Michael Macleod
    Michael Macleod Member Posts: 22 ✭
    edited January 2017
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    I think that what you need to do is to create a service item called bad debts where you set up the account for the revenue as being your bad debt expense account.You then raise a credit note with the amount of the bad debt depending on how you treate GST. Note that a bad debts charge is recoverable as far a GST is concerrned. The total amount of the credit note including GST will be the amount you are writing off. The expense account for Bad debts will be debited and the GST is recovered. You then only need to apply the credit against O/s invoices

    Michael Macleod

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