Bad Debt

[elvis]

On 13/08/13 03:22, Hilary wrote:
> 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




I did something similar, but didn't use imbalance, I only use that for 
things are are actually wrong, makes them easier to spot. And if you 
start changing splits it makes it very hard to track anything.

I paid the invoices to a "Bad Debts Clearing Account" under liabilities. 
Then transferred the total to my bad debts expense account at the end of 
quarter. This way you also keep a track of who has not paid.



>
> 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.
>>
>
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