Bad Debt

[Hilary]

Hey All,

I was hoping for some help.  I followed Buddha's advice to try to make 
up for the bad debt - paying to imbalance and then changing the split to 
bad debt expense account.

I'm finding thought, that by moving it out of the imbalance account, 
GnuCash erases the payment to the original invoice.  So the invoice 
looks again like it's never been paid.

Is there something I'm doing wrong?

Thanks for any advice.

Best,
Hilary

On 05/30/2013 04:11 PM, Buddha Buck wrote:
>
> On Thu, May 30, 2013 at 3:39 PM, Hilary <hilary at mayfirst.org 
> <mailto:hilary at mayfirst.org>> wrote:
>
>     Yes - basically we collect dues for services but sometimes a
>     member will drop out or not have enough money to pay.  I don't
>     just want to zero out the invoice - I want to be able to figure
>     out how much we weren't able to collect.
>
>     I've been reading about contra receivable accounts but unsure if
>     that works in Gnucash.  The invoice is currently a receivable. 
>     But I can't "pay" the invoice from another expense account.  So I
>     wasn't sure if I should create a liability account and then create
>     a transaction from the bad debt expense account to liablities or
>     create a bad debt receivables account or just a regular income
>     account? Sorry - accounting is not completely my forte.
>
>
> Yes, it makes sense.  Ultimately, you want the invoice to be marked 
> "paid", and the "payment" to be charged to Expenses:Bad Debts.  As you 
> notice, GnuCash doesn't allow you to do that directly.
>
> A similar case happens in my organization where we have the 
> opportunity to allow a member to get a "scholarship" when we recognize 
> that their non-monetary contributions are worthwhile, even if their 
> financial situation doesn't allow them to pay regular dues.  We too 
> want to keep track of what we are paying in scholarships.
>
> What I've found I can do to accomplish this goal is, like you 
> suggested, use an intermediary account to register the payment, but 
> then go in afterwards and edit the transaction to change the account.
>
> Let's take a sad example:  Bob was an active member of my 
> organization, but was 2 months behind on his monthly $100 dues.  Bob's 
> membership was abruptly terminated by a fatal car crash, and we don't 
> feel like going after his estate for the $200 receivable.  So we want 
> to write it off.
>
> So I open up Bob's Customer Report, verify that he has $200 due, then 
> go to Business->Customer->Process Payment, select Bob as the customer, 
> and put in $200 for the payment.  I choose "Imbalance-USD" for the 
> Transfer Account, and complete the payment.  In normal operations 
> there shouldn't be anything in Imbalance-USD, which is why I used it 
> -- it'll make it easy to find the transaction.  Then I open the 
> Imbalance-USD account and find the payment transaction I just made. 
>  It should be the only thing there.  I open it up as a "split", and 
> change the account on the Imbalance-USD split to Expenses:Bad Debt. 
>  When I save the transaction by hitting "Enter", it should disappear 
> from this register.
>
> If I got to the register for "Expenses:Bad Debt", I should see the 
> transaction.  Double-checking the Customer Report, Bob now owes 
> nothing, and the invoices are marked "Paid".
>
> It's a little clumsy, but it works, and you (hopefully) won't be doing 
> it often.
>
> In my "Scholarship" case, I use Expenses:Scholarships instead of 
> Expenses:Bad Debts.
>