The Postings Made on Writing Off Transactions Below a Certain Value
On the Sales Ledger
A sales credit transaction is added to each
of the customer accounts concerned using the system date, the original
invoice 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 will be T9. If more than one transaction is written off, separate
credit transactions are added for each one.
All invoices written off are allocated in
full to the bad debt credits automatically.
The customer account balances are reduced
accordingly.
The total amount owed by your customers, as
shown in the debtors control account in the nominal ledger, is reduced
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).
On the Purchase Ledger
A purchase credit transaction is added to
each of the supplier accounts concerned using the system date, the original
invoice 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 will be T9. If more than one transaction is written off, separate
credit transactions are added for each one.
All invoices written off are allocated in
full to the bad debt credits automatically.
The supplier account balances are reduced
accordingly.
The total amount you owe to your suppliers,
as shown in the creditors control account in the nominal ledger, is reduced
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).
Related Topics
Write Off Transactions Below a Specified Value