The Postings Made on Writing Off a Small Overpayment
On the Sales Ledger
A sales invoice transaction is added to each
of the customer accounts concerned using the system date, the original
payment/credit reference and a details description of Bad Debt Write Off.
The nominal code used will be that of the bad debt write off account and
the tax code used will be T9. If more than one transaction is written
off, separate invoice transactions are added for each one.
All payments/credits written off are allocated
in full to the bad debt invoices automatically.
The customer account balances are increased
accordingly.
The total amount owed to you by your customers,
as shown in the debtors control account in the nominal ledger, is increased
by the value of each of the write offs concerned (debit postings).
The balance of the bad debt write off account
in the nominal ledger, representing the total cost to your business for
the write offs, is reduced by the total value of the write off (a credit
posting).
On the Purchase Ledger
A purchase invoice transaction is added to
each of the supplier accounts concerned using the system date, the original
payment/credit reference and a details description of Bad Debt Write Off.
The nominal code used will be that of the bad debt write off account and
the tax code used will be T9. If more than one transaction is written
off, separate invoice transactions are added for each one.
All payments/credits written off are allocated
in full to the bad debt invoices automatically.
The supplier account balances are increased
accordingly.
The total amount you owe your suppliers, as
shown in the debtors control account in the nominal ledger, is increased
by the value of each of the write offs concerned (credit postings).
The balance of the bad debt write off account
in the nominal ledger, representing the total cost to your business for
the write offs, is increased by the total value of the write off (a debit
posting).
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