How to write off bad credit

[Bob Taylor]

On Thu, 2009-01-15 at 17:18 -0800, Cam Ellison wrote:
> Bob Taylor wrote:
> > 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!
> >
> >   
> Aye.  This isn't a debt, though - it's on the A/P side.  I think he 
> actually needs to go through the process: it's not a regular transaction 
> where you can simply transfer it from one account to another.  I think 
> he tried to do that, but it did not clear the payment from the A/P 
> register.  That is, it still shows up in reports.

If Gnucash isn't designed to handle such common business accounts as
customers on credit sales (A/R) failing to pay, then this is a *serious*
flaw. The same goes for Returns and Allowances and Credits. In this
particular case you *decrease* the person's A/R account and *increase*
the Bad Debts account. Why doesn't Gnucash allow this common method?

Does Gnucash handle contra-accounts?? It certainly should. (need to find
my accounting book).
-- 
Bob Taylor