[GNC] Issues with "doubtful accounts" contra account for bad debt.

[Wm Tarr]

Hi, I see no-one else has replied so I'll have a go.

The last time this came up it was in relation to the USA and other 
people's way of doing things (I'm in the UK) wasn't found to be helpful.

I notice you're in Canada so perhaps people are waiting for someone from 
there to reply with country specific advice?

Wm


On 2026-05-19 01:58, Isabelle Knott via gnucash-user wrote:
> Hello there! I have a question about how to account for bad debt and allowance for doubtful accounts in GNUCash.
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> I run a not-for-profit organization funded by members dues. We use the accrual basis for accounting, so we generate invoices for each member every month. Sometimes a member goes MIA and doesn't pay their dues for a few months. When that happens, I create a transaction that credits A/R for the amount owing, and debits a "Doubtful Accounts" asset, which sits next to A/R but is not a sub-account.
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> This is how my current setup looks in the accounts overview, supposing I have $1,000 owing to us, $100 of which is doubtful.
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> - Assets  $1,000
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>      - Accounts Receivable  $900
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>      - Doubtful Accounts  $100
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> If the member disappears completely we have to account for this as bad debt. To do that, I assign that first transaction as a payment on their invoices (so they can be marked as "PAID"), and then I create a split transaction crediting "Doubtful Accounts" and debiting a "Dues Forgiveness" expense account and a "Bad Debt" liability account (which tracks the uncollected sales tax.)
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> This way the "Doubtful Accounts" account is nominally zero, and can be easily referenced to see how much of our expected members dues are delinquent/dubious at any given time.
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> If instead the member returns and pays their dues, I make a transaction undoing the first transaction, bringing "Doubtful Accounts" back to zero. Their payment transaction credits A/R as usual, and it is this real payment that pays-off their invoices.
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> A couple of questions:
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> Firstly, is there a better way to do this in GNUCash? A better process? I used to un-post invoices and add a negative line item to cancel out the amount owing, but I'd like to track the amount of forgiven dues as an expense over the course of the year.
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> Secondly, ideally I want "Doubtful Accounts" to be a contra account against A/R. Ideally I'd like it to be a sub-account, with its account type set to "liability." That way it contributes to the sum-total of A/R but would also render as a negative number underneath in the accounts overview like so:
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> - Assets  $1,000
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>      - Accounts Receivable  $1,000
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>          - Doubtful Accounts  -$100
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> This reads a lot better to me, and I like how it appears when I generate balance sheets (I always set the "calculate subtotal" option for parent account balances.)
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> I did some sniffing around the mailing list and this method has been described before by David Cousens[^1]. Unfortunately, I cannot use the transactions I make from A/R to "Doubtful Accounts" as payments against the member's invoices. The "Doubtful Accounts" account doesn't appear in the account list if it's under A/R as a sub-account, and so I cannot submit the dialog box if I right-click on those transactions and hit "assign as payment." Is there a way to workaround that?
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> Thanks for your time!
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> [^1] https://www.mail-archive.com/gnucash-user@gnucash.org/msg13297.html
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> Isabelle Knott
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> Director | Queer Computer Club Inc.
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