Bad debts are the debts of an individual or legal entity declared bankrupt that does not have sufficient property to pay off the debt, as well as the debts of a deceased person or a person declared incapacitated, missing. In addition, those debts for which the statute of limitations has expired are considered hopeless.
It is necessary
Insolvency documents
Instructions
Step 1
The regulation on accounting records obliges enterprises to write off bad debts. In order to understand whether the statute of limitations has expired, it is necessary to refer to the Civil Code. If the organization, whose rights have been violated, did not go to court, then after 3 years there comes a limitation period, which cannot change the enterprise at its own discretion.
Step 2
The limitation period begins on the day the organization became aware of the violation of rights. For example, from the moment when the buyer had to transfer money for the delivered goods, but did not do it. If the debtor signed a reconciliation of calculations or paid off his debt in part, then the claim period begins from that moment. As soon as the company files a claim in court to recover the debt, the limitation period is interrupted.
Step 3
Bad debts are also debts for which obligations have been terminated on the basis of an act drawn up by a state body due to the impossibility of its execution.
Step 4
It is possible to write off bad debts of a legal entity before the expiration of the limitation period; for this, that organization must be liquidated, since all obligations are terminated at the time of liquidation. And when writing off such debts, the accountant must take an extract from the state register.
Step 5
When writing off, in any case, there must be confirmation of the existence of a debt, these can be acts of work performed and services rendered, acts of acceptance and transfer of property, reconciliation acts, inventory certificates, invoices and contracts. The storage period for these documents begins from the moment the debt is written off, otherwise problems may arise with the confirmation of expenses.
Step 6
The accountant attaches the written off amount to the financial results of the enterprise, the amount of debt itself - other expenses. That is, the posting is carried out on Debit "Other income and expenses" No. 91, and on the Credit - the account on which the debts were located.
Step 7
Debt written off at a loss does not cancel the debt, for 5 years these debts are accounted for on off-balance sheet account 007 “Debt of insolvent debtors written off at a loss”. If suddenly the moment comes when the debtor decided to return the money, then he should be written off from off-balance accounting and included in the Debit income of one of their accounts for accounting for cash and Credit No. 91.
