The Postings Made on Writing Off a Transaction
A sales credit note is added to the customerÆs
account to which the transaction relates, using the system date, the reference
from the original invoice and a details description of Bad Debt Write
Off, and will be for the full amount of the transaction written off. The
nominal account used will be that of the bad debt write off account and
the tax code used will be T9.
The invoice written off is allocated in full
to the bad debt credit automatically.
The customerÆs account balance (the money
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, representing the cost to your business of write
offs, is increased by the value of the write off (a debit posting).
Related Topics