Hello. I am not an accounting expert and am looking for what the standard practice is for writing off AR. We have several old AR entries for both AR credits and regular receivables that I would like to clear off our aging. The credits fall into a couple categories based on how our business software systems handles a given transaction:
1. Overpayment: We received a check for more than the value on the invoice. The system will leave the remaining deposit balance in AR as a credit.
2. Deposit on Account: Self explanatory. An entry is made in a liability account and the credit appears in AR.
Is it standard practice to write off both AR credits and regular receivables to "ALLOWANCE FOR BAD DEBTS" account?
Thank you.
1. Overpayment: We received a check for more than the value on the invoice. The system will leave the remaining deposit balance in AR as a credit.
2. Deposit on Account: Self explanatory. An entry is made in a liability account and the credit appears in AR.
Is it standard practice to write off both AR credits and regular receivables to "ALLOWANCE FOR BAD DEBTS" account?
Thank you.
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