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Using TurboCASH

 







BAD DEBTS
RECOVERY OF BAD DEBTS ALREADY WRITTEN-OFF
  
It may happen that the debts, which were previously written-off as bad debts or irrecoverable debts, may be recovered. In most cases, only a portion of the amount in respect of bad debts already written-off may be recovered. This amount of bad debts received would be entered in the receipts journal. There are 2 ways to which the Bad Debts Recovered transaction in the receipts journal may be allocated:
  1. The amount could be allocated directly to the Bad Debts Recovered account. This is an Income account. This is not generated from normal business activities and this account should be linked to an Other Income Account Group.

  2. The amount could be allocated directly to the Debtor's account. This will create a credit balance in the Debtors Account. To clear this credit balance, another transaction need then to be entered to transfer the amount received (credit balance) from the debtor's account to the bad debts recovered account. It is recommended that this method be used, since you will have a complete record of the transactions (the original write-off and the recovery of the bad debts in the detailed debtor transaction report for the debtor's account.
To Enter Receipts Transactions for the Recovery of Bad Debt:
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 Receipts Journal for the specific Bank Account, in which you wish to enter the receipts or credits from the list displaying the available Batch Types and click on the button. The Batch Entry screen for the selected Receipts Journal will be displayed.
Capture the Recovery of Bad Debts from the Deposit slips or Receipts. You need to record the deposit number, date of the transaction, details of the transaction and select the debtor account. If VAT was applicable when you have written-off the original debt, you need to select the bad debt tax code. You also need to enter the amount in the credit column.

You also need to transfer the amount (excluding VAT) from the Debtor account to the Bad Debts Recovered account. To do this, you need to use the same reference numbers, select the Bad Debts Recovered (Other Income) account, select the No Tax code, and enter the amount in the credit column. On the next line, you need to use the same reference number, select the Debtor's account, select the No Tax code and enter the amount in the debit column.

 

Since the Receipts Journal is set to allow credit amount entry only, you need to enter a negative "-" minus sign) in before you type in the amount in the credit column. As soon as you press the key on you keyboard, TurboCASH will automatically transfer the amount to the to debit column.

After entering the transactions for the recovery of bad debts in the receipts journal, it will be displayed as follows:

Minimise button - inactive. Restore button - click to display this screen to full size and click again to restore it to its original size. double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Use the same reference number for all 3 entries. Enter or select the date of the transaction. Use the same date for all 3 entries. Enter a description for the transaction. Select the Debtor Account. Select the Tax code or VAT account for Bad Debts Leave blank for the first 2 entries. Enter credit amounts for accounts in this column. Scroll bar - scroll to view more transactions entered in the batch. Select the Bad Debts Recovered Income Account. Select the Debtor Account. Leave blank for the rest of the other 2 transactions. Enter debit amount for to create the debit transaction for the Debtor account, since the amount was already written off. Leave blank.
fter entering all the receipt transactions, you need to click on the speed button or icon press the key on your keyboard. TurboCASH will create the balancing entry to the bank.

Minimise button - inactive. Restore button - click to display this screen to full size and click again to restore it to its original size. double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Use the same reference number for all 3 entries. Enter or select the date of the transaction. Use the same date for all 3 entries. Enter a description for the transaction. Select the Debtor Account. Select the Tax code or VAT account for Bad Debts Leave blank for the first 2 entries. Enter credit amounts for accounts in this column. Scroll bar - scroll to view more transactions entered in the batch. Select the Bad Debts Recovered Income Account. Select the Debtor Account. Leave blank for the rest of the other 2 transactions. Enter debit amount for to create the debit transaction for the Debtor account, since the amount was already written off. Leave blank. TurboCASH will create balancing entries to the Bank account and to the Bad Debts Tax code.
If the Consolidate balancing option is selected in the Setup Options for this batch, the description for the balancing entries or transactions, will be displayed as "BALANCING ENTRY Receipts Jnl". It is a good idea to overtype this description as it is not very meaningful to an outside auditor or accountant. If you overtype these it will definitely make it easier to trace and reconcile transactions.
  • Overtype the description with "Deposit Slips D8001 " in the description column.

  • Overtype the description with "VAT on Bad Debts Recovered" in the description column.

  • Do not overtype the ******** as it will indicate that these are contra transactions.
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 receipts to the current bank account and credit the selected debtor accounts. The accounts will be displayed as follows:






A credit balance for the amount of Bad Debts (excluding VAT) is created on the Debtor's account, since the account should have a nil or zero balance when the debt was originally written off as bad debts. The first transaction for the Recovery of Bad Debt entered in the receipts journal, created a credit balance in the debtors account. The second and third transactions debited the debtor's account (to clear the credit balance) and credited the Bad Debts Recovered account.

If the Consolidate Balancing Entries option was not selected when the options for this batch was set, the individual receipts transactions would have been listed or posted to the Bank Account.

You may enter transactions in a batch daily and only post at the end of the month. Exiting or closing the batch, or even TurboCASH, will not cause these transactions to be lost. You may also choose to post after every entry.

TurboCASH allows you to reconcile your Bank Accounts before posting your Payments and Receipts journals. This will allow you to easily correct any errors found, when doing the bank reconciliation. Please note that you cannot reconcile unposted items created on the "client machines" if you are working on a network version of TurboCASH.

If you have any repeating entries setup for your payments and receipts batch, you need to copy them to the normal batch as they will not reflect in the Cash Book for a specific period when doing the Bank reconciliation.