Bad Debts Recording

[Omer Hayat]

thanks for the responses.
If I were to put down Maf's method in double entry form, then it would be:
1st entry:Dr Bank    Cr A/c receivable
then, 2nd entry:Dr Bad debts    Cr Bank
Which can be summarised in a single entry as:Dr Bad debts   Cr A/c receivable
It would have been better if this was possible thru the 'Pay Invoice' dialog.

> From: davidcousens at bigpond.com
> To: omer.hayat at outlook.com; gnucash-user at gnucash.org
> Subject: RE: Bad Debts Recording
> Date: Thu, 7 Nov 2013 22:20:42 +1000
> 
> Hi Omer,
> 
> The method Maf suggested is perfectly viable. The main purpose in using a
> writing off a portion of your Accounts receivable to a Bad Debt expense
> account on a regular basis is so that your income is not overestimated in
> any given accounting period or sub period.  I.e., if your accounting
> (reporting) period is annual you could estimate the bad debts at the end of
> each month. The amount of your estimated bad debt is credited to the
> Accounts Receivable account and debited to the Bad Debts expense account.
> 
> The amount you write off can be estimated using historical data to estimate
> the fraction of your receivables which is uncollectable. There are also
> methods based on the ageing of your receivables, i.e. the amount of your
> receivables un collected at 30, 60, 90, 120 days etc.  after the receivables
> became due. Best to see a text book on financial accounting for the details
> of the methodology.
> 
>  It is also normal practice to adjust the estimated bad debts during the
> period to match the known actual bad debts incurred during the period, at
> the end of the period, when the actual bad debts for the period are better
> known by writing off the difference between actual and estimated bad debts
> to the Bad Debts expense account. Early in the accounting period you will
> have accurate data for the bad debts but towards the end of it there will be
> a greater uncertainty but it is a way of correcting if your debt collection
> has been significantly better or poorer than your initial estimates. There
> may also be seasonal variations which you can account for.
> 
> Regards 
> 
> David Cousens
> 
> -----Original Message-----
> From: Omer Hayat [mailto:omer.hayat at outlook.com] 
> Sent: Tuesday, 5 November 2013 4:48 AM
> To: gnucash-user at gnucash.org
> Subject: Bad Debts Recording
> 
> Hi.Some customers default on the complete invoice amount whereas some on
> part of the invoice amount. After a set time period, these have to be
> recorded as 'Bad Debts'. How to do it in GnuCash? Also, there is a
> possibility the client pays later on, so how will that be recorded? Thanks.
> 
>