[GNC] GnuCash Question: Posting query regarding Accounts receivable and Bad Debts

[Adrien Monteleone]

Create an *Asset* account labeled something like, ‘Allowance for Doubtful Accounts’.

You can place it as a child of the official Accounts Receivable account if you like, or create a new parent labeled ‘Other Accounts Receivable’ and place it as a child of that account.

Just be certain to make any of those normal *type* ‘Asset’ accounts. You can only have ONE *type* ‘Accounts Receivable’ no matter what you call it.

Then ‘pay’ the invoices with ‘Allowance for Doubtful Accounts’.

The original invoice contained something like:


Dr. Accounts Receivable
  Cr. Income


Now, this ‘payment’ will result in:


Dr. Allowance for Doubtful Accounts
  Cr. Accounts Receivable


So your AR for that customer will be correct. (and AR as a whole)

Now, edit your charge off transaction(s) to be between the ‘Allowance for Doubtful Accounts’ and ‘Expenses:Bad Debts’ like so:


Dr. Expenses:Bad Debts
  Cr. Allowance for Doubtful Accounts


*note, this is not specific to GnuCash, but just generic Accounting 101. Some businesses also estimate uncollectables and pre-transfer some amount to the Allowance account. Speak to a local CPA if you think this might be necessary or required in your jurisdiction.


Regards,
Adrien


> On Jun 24, 2020 w26d176, at 5:19 AM, Carla Ralph <carla at magentagroupsa.co.za> wrote:
> 
> Good Morning
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> I hope that someone is able to assist me with a query.
> 
> 
> 
> I have 2x customer invoices that keep on coming up as reminders even though a journal entry has been put through for bad debt.
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> Was not able to process payment to bad debts account from Accounts Receivable 
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> so I had to do a Journal Entry from Acc Receivable to Bad debts
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> Income:Services 
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> Assets:AccountsReceivable
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> Expenses:Bad Debts
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> Please assist me with the correct way to post this in your GnuCash system. Your assitance is greatly appreciated
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> 
> Regards,
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> 
> 
> Carla Ralph083 585 6309http://magentagroupsa.co.za/ 
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