USA Should Bad Debt be used?

[SoCunfused]

I work for a property management company. we have tenants that don't pay their rent and as a result, we never collect the rent due to us. I have written those amount off to Bad Debts, but my boss does not want to use Bad Debts. Instead, he wants me to void the invoices, as though we were never owed the money.

FYI, we tend to do things on a cash basis accounting versus accrual basis.

I'm torn about what I should do.

Any help???

 

[David Bolenbaugh CPA]

technically you should have an accrual to cash adjustment for the bad debt written off on the tax return filed (assuming the A/R was not included as income previously). As long as the A/R balance is correct after voiding then I don't see a huge issue, although the most transparent and correct way would be to use bad debt expense. The net effect to the tax return will be the same either way. Does your boss have any real background in accounting? I'm assuming no.

 

[Counterofbeans]

I have written those amount off to Bad Debts, but my boss does not want to use Bad Debts. Instead, he wants me to void the invoices, as though we were never owed the money.

Why?

I agree with David, that's by far not the most clear answer, either for the books or the tax return.