handling bad debt (unpaid invoices)

[Michael Hendry]

On 5 Feb 2014, at 00:19, Wayne Gregori <wg at gregorigroup.com> wrote:

> Disclaimer... I'm not an accountant.  But I'm getting by nicely using Gnucash.  I have a few invoices that did not get paid last year and will not be paid.  I need to write them off...  can someone give me some direction in doing that.

I’m not an accountant either!

I think you need to set up an expense account called “Bad Debts”, or similar.

You then create a transaction for each invoice as though it had been paid, but with the funds coming from the “Bad Debts” account instead of the customer.

At the end of the financial year the Bad Debts are treated just like the other Expenses you have incurred in running your business.

Should a miracle happen and the customer pays up in the next financial year, the converse transaction will result in a negative entry for Bad Debts in the Expenses for that year.

Michael

> 
> thanks
> 
> 
> 
> Wayne
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