Bad debt


R

RoyalePhoenix

What type of account do I need to create to place unpaid customer invoices
into?
 
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D

DL

You create an Expense account, named Bad Debts, if one doesnt exist.
You then create a Journal between the specific sales account and the Bad
debt account
 
R

RoyalePhoenix

Thanks for the reply, and that is what I thought, but the help files in SBA
suggest that it should be an income account - which didn't make sense to me.

This is from the SBA help file
"Write off accounts are commonly income types and act as contra-accounts to
sales revenues."
 
D

Daniel Billingsley

Well, from a practical standpoint the income statement would come out right
either way, so the question is what does GAAP say on the issue, right?
 
R

RoyalePhoenix

Don;t know what GAAP is, so.. I created a Bad Debt exspense and wrote off a
$100.00 invoice, but the invoice is still listed in my "Past Due" list.
 
R

RoyalePhoenix

Macy,

Thanks for the detailed information - but however it doesn't work out right.
When I try to apply the CM, it shows both the CM and the journal entry
created by the write off. I can't apply both, and if I try to apply just one,
it shows unused payment. I backed up and voided the CM and try to apply just
the journal entry and it tells me that the full payment hasn't been applied.

I guess I will be forced to hire an accountant.
 
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M

Macy

Void the JE and ry just CM. Use a sample company for your
experiments.

Macy
 

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