[GNC] Posting a bad debt

[rmomxtx at gmail.com]

David,

 

Excellent explanation of the standard accounting practice for handling bad
debts. I saved it. As you note, the problem is the limits of the invoice
module in GnuCash. I did create an income contra account for bad debts with
the idea of paying the invoice from that account and later entering a
transaction to move it to the bad debt expense account. A customer got a
case of the guilts and asked how much she owed after I had charged it off. I
received her payment direct to a cash account (dr) and a credit to this bad
debt income account. That works but I don't feel I have a handle on it yet,
that it is the best practice. Might be a useful feature/fix to add to the
program in the future.

 

Thanks,

Roger

 

Message: 9

Date: Tue, 9 Apr 2019 18:59:16 -0500 (CDT)

From: David Cousens <davidcousens at bigpond.com
<mailto:davidcousens at bigpond.com> >

To: gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org> 

Subject: Re: [GNC] Posting a bad debt

Message-ID: <1554854356764-0.post at n4.nabble.com
<mailto:1554854356764-0.post at n4.nabble.com> >

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Roger,

 

The conventional accounting procedure for bad debts is to have a contra sub-

account to the accounts receivable usually labelled "Allowance for Bad

Debts" as Adrien indicated earlier. The total of this account sums into the

Account Receivable account, i.e. it is a child account. It is called a

contra account  because the entries which increase its value are credits

(debits increase the balance of an asset account).

 

David Cousens

(Chose not to copy the entire post as it makes the thread very long and the
original is available in the earlier email. If I did wrong, someone will let
me know.)