Provision for Bad Debts

[Former Member]

Hello friends,

Do any one know how to configure provision for Bad and Doubtful Debts, and How Bad Debts are treated.

Points Assured.

Satish

[Former Member]

Hi Gurus,

i am following the same steps given in the link

while i am clearing the payment through f-28,the provision amount is nt updated in the open item .

if u please clarify hw many g/l account i hv to create for provisions, whether they are p/l or balance sheet item??

Step 2 is nt clear to me??

thnx in advance...

Plz clarify.....answer will be rewarded.

Regards,

Arindam

Edited by: Arindam Bhuin on Feb 7, 2012 6:17 AM

Edited by: Arindam Bhuin on Feb 7, 2012 6:18 AM

Edited by: Arindam Bhuin on Feb 7, 2012 6:19 AM

[Former Member]

Hi,

These both are maintained or entered manually. There is no customisation. You need to create three GL accounts. One in Balance sheet as "Provision for Bad Debts" and other two in P&L.

1st one will be bad debt account, wherein you need to actual post the value which is non-recoverable.

2nd will be the contra for the balance sheet account.

At the end of the month/ quarter etc., the company while creating the reserve, should pass the following entry:

Dr. A/c 2 (P&L)

Cr. Balance sheet A/c

Before creating the fresh, the earlier entry should be revered.

When actual bad debt happens, then after managment approval, please pass the following entry:

Dr A/c 1 (P&L)

Cr. Customer (Clearing the open line item)

Hope this helps, if yes, please assign points.

Regards,

Harish

[Former Member]

Hi

Step 1:OB04 :You can define here the % of provision.

Step 2:FS00 :Creation of GL Accounts

BAD DEBTS,PROV FOR BAD DEBTS-NORMAL ACCOUNTS(EXP&LIAB)

BAD DEBT RECON Account AND RESERVE FOR BAD DEBT RECON ACCOUNTS (Both CUST Recon G067)

Step 3:FD01Create customer

Step 4:F-22 Post INVOICES.

Step 5:OBXD BAD DEBT TO PROV FOR BAD DEBT

Step 6:OBXY SDRS TO BAD DEBT RECON

Step 7:F103 DRS TO RECON

Step 8:F104 BD TO PROV BAD DEBT

Step 9:F-28 BANK TO CUST (E -indicator)(RESIDUAL OR PARTIAL PAYMENT IN EACH INVOICE)

assign points if useful