Settling an account

[Derrick Hudson]

On Tue, Nov 06, 2007 at 10:55:32PM +0000, Karl Grant wrote:
 
| Secondly, how can I settle an account. I.e. a customer has paid the majority
| of an invoice, neglecting the cents and I want to consider this settled.

You need to credit the receivable and debit an appropriate expense
account.  This transaction is called an "adjusting entry".  The credit
to receivables will result in your books showing that customer owing
you nothing.  The debit to expenses is needed to show where that money
went, and to accurately show that amount as an expense (opposed to the
income you already recorded).

For example, suppose that customer's name is "J.Doe", and suppose you
have an account named "Expenses:Operating Expenses:Customer Goodwill
Allowances" to track the expense.  You will create a transaction like
this to eliminate the remaining debt on the customer's account:

    Account                                                      Debit Credit
    -------                                                      ----- ------
    Expenses:Operating Expenses:Customer Goodwill Allowances     0.68
        Assets:Accounts Receivable:J.Doe                                0.68


You could record these as two additional splits on the transaction
where you recorded the receipt of the customer's payment.

-D

-- 
In his heart a man plans his course,
but the Lord determines his steps.
        Proverbs 16:9
 
www: http://dman13.dyndns.org/~dman/            jabber: dman at dman13.dyndns.org
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