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?
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?
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1,518 Points
Posted 4 years ago
Gary Pope, Accredited Consultant (Acct & IT), Alchester Business Systems., Accredited Partner
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19,116 Points
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
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
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1,518 Points
Gary Pope, Accredited Consultant (Acct & IT), Alchester Business Systems., Accredited Partner
-
19,116 Points
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)
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)
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660 Points
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
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
(Edited)
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