Subtitles of the Movie

Depending on your business, it's likely that you'll eventually run across a customer who just can't or won't pay you. When you know that a debt is never going to be recovered, you'll need a way to write it off so you don't have that amount showing as income. The process of doing this is actually very similar to that of issuing a credit so it's quite easy. We do however need an expense account to reflect bad debts. If this has not already been set up, we'll need to create one. Go to the Accounts Command Center and open the Accounts List. Select the Expense Tab at the top and look for a bad debt account. The default accounts list that I chose when I set up this company file doesn't have one so I'll create one now. I'm going to slot this account in here under the 6-1000 series of accounts as a general expense. Click the New Button and I'll give it the number 6-1900. Hit the Tab Key on the keyboard and I'll simply call this account Bad Debts. OK, now we go to the Sales Register and see if we have a debt to write off. Mr. Smith does have two open invoices here, each with an amount of 14.25. Let's use one of these. Notice that the total amount was 1500 dollars but we applied a credit of 75 dollars earlier on so Tim only owes us 14.25, which his reflected by the balance due. This is the amount that we need to write off. To do this we'll need to create a new sale. And we need to use the Miscellaneous Layout. I'll put Mr. Smith in here and select Miscellaneous, enter a description. I'm not feeling very creative today so I'll just call it Bad Debt and in the Account Column, select the Bad Debts Account that we just created. MYOB will now remind us that sales are usually supposed to use an income account but this isn't a typical sale; it's a write-off so hit OK. Now just like we did with credits, we're going to enter a negative value for this amount; negative 14.25, the amount that we need to write off. If the original sale included tax, we need to include it here as well. And finally, click the Record Button. Cancel this and the rest of the process is exactly the same as applying credits, which we did recently. Go to the Sales Register, select the Returns and Credits Tab and highlight our new entry. Make sure the correct entry is highlighted and at the bottom, click the Apply to Sale Button. Once we're in the Settle Returns and Credits Window, click the Amount Applied Field next to the sale that we're going to write-off. Hit the Tab Key once and check that the out-of-balance amount is zero. Hit the Record Button and we're finished.