Write off customer bad debt

Outcomes

Note: Foreign currency implications on write offs are covered in the topic Provisions for bad debt on foreign currency transactions.

If VAT is not to be reclaimed:

The sales account balance is updated with a credit amount with the reference WRITE OFF. The goods amount is set to the gross amount (goods plus VAT) and the VAT amount box is set to zero.
If items were provided for before write off, the total value is debited to the provision for bad debts account, called Bad Debt Provision (balance sheet). A corresponding entry is made by crediting the sales control account (balance sheet).
If items were not provided for before write off, the total of the transactions (including VAT) is debited to the bad debts account, called Bad Debt Expense (profit and loss). A corresponding entry is made by crediting the sales control account (balance sheet).
The VAT table is unaffected.

If VAT is to be reclaimed:

If provision was made for the items	If provision was not made for the items
A credit note is added to the sales account for the total goods and VAT.	A credit note is added to the sales account for outstanding goods and VAT.
(If an item is part-paid you will have specified the amount of VAT to be reclaimed.)
The total transactions (including VAT) are debited to the provisions for bad debts account, called Bad Debt Provision (balance sheet).	The total goods value (including VAT) are debited to the bad debts account, called Bad Debt Expense (profit and loss).
The VAT account (balance sheet) is debited with the value of the VAT.	The VAT account (balance sheet) is debited with the value of the VAT.
A corresponding credit entry is made in the debtors control account (balance sheet).	A corresponding credit entry is made in the debtors control account (balance sheet).
A corresponding credit is posted to the bad debts account, called Bad Debt Expense (profit and loss).
The VAT table is updated with the goods and VAT amounts from the credit note. The VAT rate used is the one stored with the Sales Ledger account.	The VAT table is updated with the goods and VAT amounts from the credit note. The VAT rate used is the one stored with the Sales Ledger account.

To write off bad debt

Open: Sales Ledger > Adjust Transactions > Write Off Bad Debt.

Choose to display a Single customer or Multiple customers accounts.

If you specify Multiple customers, you can select the range of accounts from the Code from and Code to lists.

If you specify a Single customer, you need to select the customer Code you want to write off.
Use the Selection criteria to specify whether you want to write off All transactions or selected transactions By date range. If you select to write off debts by date, select the Date from (start date) and to (end date) of the date range.
Select the Display provisions only check box if you only want to display transactions you have previously made provision for.
Select the entries that you want to write off by selecting the check boxes at the left hand side of the window.
If an entry was previously marked for provision (query flag W), the entry is marked for write off from the provisions account. If the entry has been part-paid, you must enter the amount of VAT included in the write off.

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