handling bad debt (unpaid invoices)

[Michael Hendry]

On 6 Feb 2014, at 20:00, Wayne Gregori <wg at gregorigroup.com> wrote:

> Thanks for the note Michael!
> 
> That's what I thought... so I created the Bad Debt account and created the necessary entry... however, the invoice is still in my receivables aging... how do I deal with that?

Did you do this the way Derek Atkins suggested?

Have a look at this thread:

http://gnucash.1415818.n4.nabble.com/Bad-Debt-td4662199.html

It looks as though it’s a bit more complicated than I thought, but do-able.

Michael

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> 
> Thanks
>  
>  
> Wayne Gregori
> 
>  
> On Tuesday 04/02/2014 at 4:42 pm, Michael Hendry wrote:
>> 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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> 
>