- Estimates or calculations based on the age analysis schedules of your debtor accounts.
- Estimates or calculations based on the total outstanding debt.
- Estimates or calculations based on the total sales on credit.
To Create Provision for Bad Debts:
Click on the speed button or icon. You may also press the key on your keyboard. Alternatively you may press the and and keys on your keyboard. The Batch Type screen will be displayed.
Select the General Journal from the list displaying the available Batch Types and click on the button. The Batch Entry screen for the General Journal will be displayed.
If no contra account or if any other account than the Bad Debts (Expense Account) is displayed on the Batch Type selection screen, you need to set the options for the batch. If you have not yet set the General Journal batch up, or if your requirements should change, click on the speed button or icon. Note that for the Provision for Bad Debt transactions, the Amount Entry field should be set to allow both.
Enter the Reference number you allocate to the Provision for Bad Debt transaction, date, description, select the Bad Debt expense account, select the No Tax code and enter the amount in the debit column. For the second line, select the Provision for Bad Debts account and enter the amount in the credit column.
After entering the transactions in the General Journal, the transactions will be displayed as follows:
It is not necessary to balance the batch, since the debit and credit transactions you have entered should already be in balance.
Click on the speed button or icon or press the key on your keyboard to change the alias. This will help you if you wish to identify a specific batch, if you wish to generate a batch type report or if you wish to export posted batches to a file.
Click on the speed button or icon or press the key on your keyboard to list the batch. It is a good idea to list the batch and check the entries on the batch thoroughly. If there are any errors, you may edit the batch before posting the batch.
Click on the speed button or icon or press the key on your keyboard to post the batch. TurboCASH will post the entries to debit the total of the bad debts written-off (excluding VAT) to the bad debts expense account and credit the selected debtor accounts. The posted transactions will be displayed as follows in the debtors' ledger and the general ledger accounts:
In larger concerns, the provision for bad debts or doubtful debts may be done on a regular basis (e.g. monthly or a six monthly basis), while most businesses makes provision on a annual basis.
The Tax legislation and practice notes issued by your Tax Authorities give guidelines to calculate or estimate any provisions. If you use any method to calculate the provision, you need to be consistent with the method in the consecutive years.
Before you wish to post the batch, please ensure that you have checked the transactions and that you have changed the alias, print a list of the entries in the batch.