A/R Credits when the customer goes out of business

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A/R Credits When the Customer Goes Out of Business

If you have a credit for a customer in accounts receivable and the customer goes out of business, you may wish to write off the credit. Go to the "Payments" Module step on the A/R Module. Enter the general ledger account number to write off the credit to. Check off the bad debt box on the batch number pop up form. Select the customer and the payment amount screen will pop up. Enter the amount of the credit in the amount paid field and press OK. Then select the credit for payment.
The results of this process should be documented.
We strongly recommend that you consult with your accountant or CPA for the preferred method of handling this transaction. Some transactions may have potential tax and/or legal ramifications that should be discussed with your advisors.