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Re: Doubtful and Bad Debts

Re: Doubtful and Bad Debts

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Re: Doubtful and Bad Debts

by
Open Source Integrators, Gregory A Mader
- 06/02/2016 18:35:09
If you want an out of the box approach,

Set up these journal entries ahead of time, but don't put in the amount of money.  Save it as a draft journal entry.  Don't confirm it. 

Then, when you need to do an actual transaction, duplicate the template/draft journal entries, fill out the correct amount, and confirm it.   


Alternatively, you write a module to do the same thing.  We have written similar modules, but generally only when it is an everyday sort of problem.    

Does this make sense?

Greg

Sent from my iPhone

On Feb 6, 2016, at 9:37 AM, Levent Karakas <levent@mektup.at> wrote:

Yes, this makes sense as the write-off method for bad debts. How do we follow doubtful debts (contra account for AR)? A debt becomes doubtful and it can get paid or not after that. Here's how it is handled here:

When it becomes doubtful:

120 Account receivable -> credit 100
128 Doubtful Debts -> debit 100

Reserve for doubtful debt:

129 Doubtful Debts Reserve (-) -> credit 100
654 Bad Debt Expense -> debit 100

case 1:

Doubtful debt paid:

128 Doubtful Debts -> credit 100
100 Cash -> debit 100

Clear reserve:

129 Doubtful Debts Reserve (-) -> debit 100
671 Previous Period Income  -> credit  100


case 2:

Doubtful debt becomes bad debt:

128 Doubtful Debts -> credit 100
129 Doubtful Debts Reserve (-) -> debit 100


It is very similar to allowance for doubtful debts.


2016-02-06 16:52 GMT+02:00 Gregory Mader <gmader@ursainfosystems.com>:
Simple answer-   Create a bad debt expense account. 

Create a bad debt payment journal (just like a bank journal)

Now, when you want to write off bad debt, use the payment tools, and select this bad debt journal as the method.   


Does this make sense?


Thanks
Greg

Sent from my iPhone

On Feb 6, 2016, at 7:38 AM, Levent Karakas <levent@mektup.at> wrote:

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