How to write off bad credit

[Bob Taylor]

On Thu, 2009-01-15 at 09:07 -0800, Cam Ellison wrote:
> Wouter van Marle wrote:
> > 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.
> >

[snip]

> In the normal course of events, you would receive an invoice from the 
> supplier, and I think (IANAA) that you should follow that route, since 
> that's the way GnuCash is set up.  That is, create a fake invoice, 
> noting the bankruptcy (to keep your accountant and the government from 
> asking useless questions), and proceed as you would normally.  If you 
> would usually list these materials as Assets, you'll have to fiddle that 
> as well.

IANAA also. However, I did take an accounting class many many years ago.
Since bad debts hasn't changed since then, create an expense account
called, you guessed it, Bad Debts. I would, offhand, credit Bad Debts
and debit the A/P account for this business. I would hope the U.S. IRS
still allows these to be deductible!

-- 
Bob Taylor