MoneyWorks | Bad Debts
Software: MoneyWorks accounting software
WIKIPEDIA: A bad debt is an amount owed to a business or individual that is written off by the creditor as a loss (and classified as an expense) because the debt cannot be collected and all reasonable efforts to collect it have been exhausted.
Assuming you have an outstanding Sales Invoice of $5,000.00 and you decided to write it off after chasing the debtors for years.
First, highlight your Sales Invoice from the Sales Invoice transaction list, go to the Command menu, select Adjustments and follow by Write Off.
In the Write Off Invoices window, enter the “Date” and “Debtor WriteOff a/c” (select the Bad Debt expense account) and click the WriteOff button. MoneyWorks will create a reversed Sales Invoice (Credit Note) and knock off against the original Sales Invoice which you have selected.
You can preset “G” GST code for your Bad Debts account. (“G” GST code is a 7% rated GST for Singapore user) so you can claim the GST relief for the bad debts incurred.
Please check with your accountant or IRAS about claiming of GST relief for your bad debts.
If GST is not to be claimed, you may pass a journal to debit Bad Debts expense account and credit GST Holding account after you have finalized your GST to reclassify your GST paid for the bad debts expense to the Bad Debts expense account.