Bad Debt Write Off

There are situations where you have uncollectable Accounts Receivable Invoices that need to be written off to Bad Debts. This should be done through the Cash Receipts System. In the Accounts Receivable System choose Cash Receipts System.

You will enter a deposit in Enter & Edit Deposit and instead of entering a check amount, you will enter a zero (0) deposit amount since there is no money going to the bank. Below is the menu path.

Press enter or Click on New Line to enter a new Deposit see the example below.

Once in Enter & Edit deposit you will choose your G.L account and then click ok to go to the next screen. There is no cash going to the bank so the Cash Account is not critical. Below we chose Cash Account 1.

The screen on the next page is the Enter & Edit deposit heading screen. You simply hit enter for the next numeric deposit number to auto populate. Choose your date, you can use (T) for today’s date or if you need to back date the entry select the date you would like the transaction to post to the General Ledger. Enter zero (0) for your deposit amount. Answer “Yes” to pay customer invoices. In the Reference for GL you can enter a message like Bad Debit Write off, you will be able to view this message in a GL Transaction Inquiry. Then simply press Esc or Click Ok to go to the next screen. See the example shown below.

Enter or Click on New Line to choose your first Customer.

Enter a few letters of your Customers Name to select the Customer. For the check amount enter Zero (0). An example is shown below.

The next screen shows all of the invoices that are open for the selected Customer. Select each invoice you want to write off by simply double clicking on the line you want to write off. An example is shown below.

Now you are on the Enter & Edit deposit-invoice payment details. When you enter or click on an invoice in cash receipts the system automatically fills in the Invoice Payment amount with the open amount of the invoice. This is the Amount you want to write off. Press Enter to go down to G/L Adjustment Amount and fill in the amount of the invoice. In our example below it is 230.30. Press enter to the Distribution Account where you will enter your Bad Debt Write Off General Ledger Account Number. Press Esc or Click Ok to continue.

As you can see in the example below, the Invoice balance is now in the GL Adjustment column and Invoice balance is now showing as zero. Continue this process for each Invoice you are writing off. When you are done, the Check Amount, Amount Applied and the Balance Left to Apply in the Heading should all be zero. An example is shown below.

Press Esc or Click Ok when you are finished with the Customer and you will return to the check listing like you see on the next page. Repeat this process for all Customers.

When you are done with all Customers, press Esc or Click Ok to exit the Deposit, you will return to a screen like the one below. Press Esc or Click Ok to exit Enter & Edit Deposit.

The final step is to Print the Deposit Edit Report and Update the Deposit. This is done by running the Deposit Edit Report.

Double click or enter on the deposit in the grid to select it.

After running the Deposit Edit Report, the system will prompt you to Update the Deposit.

Once updated the invoices will no longer show open in the Customer account and the invoices written off will be reflected in your Bad Debt Expense Account.