Any outstanding credits and payments on account
are paid in full.The Postings Made on Writing Off an Account
On a Sales Account (with a positive balance)
Any outstanding credits and payments on account
are paid in full.
A single credit transaction is added to the
customerÆs account, using the system date, the reference BADDBT
and a details description of Bad Debt Write Off, and will be for the full
amount of the transaction(s)
written off. The nominal code will be that of the bad debt write off account
and a tax code of T9 will be used.
All invoices written off are allocated in
full to the bad debt credit note automatically.
The customerÆs account balance (the amount
the customer owes you) is reduced accordingly.
The total amount owed to you by your customers,
as shown in the debtors control account in the nominal ledger, is reduced
by the value of the write off (a credit posting).
The balance of the bad debt write off account
in the nominal ledger, which represents the total cost of write offs to
your business, is increased by the value of the write off (a debit posting).
On a Purchase Account
Any outstanding credits and payments on account
are paid in full.
A single credit transaction is added to the
supplierÆs account, using the system date, the reference BADDBT
and a details description of Bad Debt Write Off, and will be for the full
amount of the transactions written off. The nominal code will be that
of the bad debt write off account and a tax code of T9 will be used.
All invoices written off are allocated in
full to the bad debt credit note automatically.
The supplierÆs account balance (the amount
that you owe the supplier) is reduced accordingly.
The total amount you owe your suppliers, as
shown in the creditors control account in the nominal ledger, is reduced
by the value of the write off (a debit posting).
The balance of the bad debt write off account
in the nominal ledger, which represents the total cost of write offs to
your business, is reduced by the value of the write off (a credit posting).
For accounts with negative balances, the opposite nominal postings are made to the sales or purchase accounts concerned.
Related Topics
Supplier Write Offs (VAT Cash Accounting)
Customer Write Offs (VAT Cash Accounting)