[GNC] Best way to close unpaid invoices?

[Daffy Duck]

David,

Thank you.  I realized what was happening from an accounting
perspective, but I was wondering if I can do anything that addresses
the reference in due invoices reminder?

On Sun, 2021-03-07 at 16:53 -0600, David Cousens wrote:
> There is no need to zero out the invoice. It remains as it originally
> was and
> the debt remains on the books.  What the debt write off does is
> correct your
> income for the amount of income you expected to but didn't receive
> and
> adjusts the accounts receivable to reflect that you do not expect to
> receive
> that income. 
> 
> If you cancel out the invoice and at some future time the client
> coughs up
> the money, you will have no way of accounting for how that money was
> received but a simple adjustment allows you to reverse the bad debt
> write
> off and then record the payment against the original invoice.   
> 
> When you make a payment against an invoice normally, you do not
> change the
> amount of the invoice, itself but you increase the amount of an
> asset(bank
> account) and decrease the amount of the Accounts receivable (also an
> asset )
> by the same amount.
> 
> The invoice creates an increase in an income account  and an increase
> in the
> Accounts receivable when it is posted to you accounts. In the case of
> a bad
> debt you do not adjust the income but an expense account which has
> the same
> effect on your profit. Expense accounts can be regarded as contra
> income
> accounts.
> 
> This way your accounts contain a record of the events as they
> affected your
> finances at the time the events occurred. If they are annotated well
> enough
> anyone can reconstruct the sequence of events as recorded
> 
> David Cousens
> 
> 
> 
> -----
> David Cousens
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