How to write off bad credit

[Wouter van Marle]

Hi all,

I have an issue with writing off a bad credit. I want to know how to do
this nicely. I'm using GnuCash 2.0.5.

The issue: I have a supplier who I have given a deposit for materials (a
credit; a normal thing to do in my business), and now this supplier has
declared bankruptcy so I lost my money for good. But now how to register
this properly in GnuCash.

When I call a "vendor report" on this vendor, I have a negative total
balance. I can not enter a negative payment, nor does it make sense to
me to enter an invoice. I want to get this balance to 0.

This credit of course has not yet been booked as profit or loss: it is
now a negative liability, pushing down the actual amount of liabilities
that I have.

What I have done now: I created a transaction from the appropriate
Liabilities account to an Assets:Cash account, followed by a transaction
from this Assets:Cash account to an Expense account. This detour due to
the horrible implementation of foreign currencies in GnuCash: the
Liability is in EUR while my Expenses are all in HKD. 

Effectively I am booking this credit as an Expense, and indeed it shows
up in my Profit and Loss accounts now.

But this way when I check the "vendor report", this transaction doesn't
register there, and the vendor report still has this credit open.

Any suggestions on how to do this better?

Thanks!

Wouter.