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I have a customer that has two separate JEs attach...
# accounting
j
I have a customer that has two separate JEs attached to it, each in different months. One JE is the reverse of the other, so they have a 0 balance, but the line still shows on the AR Aging report. Generally this is due to a credit or something not being applied somewhere, but I'm at a bit of a loss here, because they are JEs. Does anybody know how to handle this? We dont want that line showing up on the AR Aging anymore
l
Go to Accept Customer Payments. On a Payment transaction, select that customer and offset the JEs under the Invoices and Credits sublists.
k
or - quit booking accrual entries to AR, and instead book them to an account like "Accrued Receivables"
(answering a question that was deleted) Most likely - they had revenue to recognize before the invoice to match up with the COGS in a prior period, so they created an accrual JE that reverses itself on the first of the next month.
l
I believe there are a lot of possible reasons but yours makes sense. Thanks! I'm wondering though why don't companies with that practice just use the Invoice? "Accounts receivable" is accrued as well. They can also defer the sending of invoice if it is to be sent once they actually want to bill the customer unless it is automated upon creation, etc. Another thing is maybe because it affects the AR aging report. Are my arguments valid? Other reasons? I want to understand the rationale as much as possible. Thank you!
j
It was bad debt that was moved from a bad debt account to a bad debt allowance account. then the second JE actually moved it from the allowance account to the AR account. I'm not sure of the background other than that. I will see if I can use the first suggestion to get it cleared
l
I don't think Kevin's first suggestion apply to your case though.
k
Sometimes I see clients set up "Bad Debt" as an A/R account - when in reality it shouldn't be because you don't want to see it in an A/R aging report.
I generally prefer Bad Debt Write offs to use a Credit Memo instead of a JE - it makes the AR aging a little more intuitive.
That said - just make sure your JE has the appropriate name entered on it - and then accept a zero dollar payment to apply it against the appropriate invoice and wipe it off the report.
j
There is no invoice...
I'm not exactly sure what they did now that I'm looking at this. It's just two standalone JEs for the same amount
k
Odd.
Maybe someone made a mistake and you all aren't allowed to delete transactions so they just posted a second journal to offset it?
j
Okay - so, he says there was invoice, which he applied the JE to. He accepted a $0 payment.
but it's still showing up. Is there a way, from the JEs, for me to find the Inv and the Payment?
nvm - ill pull all transactions from customer
k
should show up on related records tab on the invoices and JEs
j
Related Records on the JEs is blank
k
Is he sure he actually applied something with his zero dollar payment?
l
The first JE appears to be recording of the bad debt expense. The second one is the actual write off of the AR. Is the bad debt allowance an AR type of account and is the one tagged to the customer in the Name field? In this case, I guess you can 'offset' them with each other using the Accept Customer Payments page (no GL impact though since amounts are equal) so they won't show up on AR Aging.
k
I'd have trouble supporting this accurately without a screenshare - and generally I don't do that outside of clients. Good luck figuring this one out!
j
yea, I understand that. and not being an accountant or much of a finance type of admin, this is super difficult for me.
Luis, ill get that info in a sec
Yes - the 'Allowance for Bad Debt' account is an AR account. It was Credited for the amount, and then the 'Bad Debt Expense' account (Expense account) was debited, for the first JE
the 2nd JE, Debited the Allowance (AR type) and Credited our actual AR account
both are tagged to customer in name field
l
Yeah, those journal entries make sense accounting-wise. Now, go to Accept Customer Payments page. Select the customer in the JEs. Under Invoices, select the 1st JE and under Credits select the 2nd JE. They should offset each other and won't show up on the AR Aging anymore. Just to confirm, in the first JE, is the Bad Debt Allowance tagged to Customer as well?
j
neither JE shows up on there
yes, all 4 lines are tagged
k
Probably not doing your Allowance for Bad Debt accounting according to GAAP if I understand this series of steps correctly. (I could be mistaken so take it with a grain of salt) You won't be able to apply them against one another as they are in different accounts.
j
there are no credits, invoices, or deposits on accept customer payments page
l
Kevin is right. They are from different accounts so they won't be offset. My bad, sorry. Accounting-wise, that's right according to IFRSs but not sure about US GAAP.
k
Either way the answer here is probably to yank the "allowance for bad debt account" out of your A/R aging report by filtering it out.
Generally Steps for Bad Debt are 1) Establish pool of allowance based on one of a couple methods (aging bucket method, or percentage of total, or another method). This is not allocated to a specific customer. (offsetting entry is bad debt expense) This is done at the end of every relevant period - (sometimes monthly or yearly). 2) As customers debt is forgiven/written off you book a JE to move from Allowance for Bad Debt to the A/R account. I probably wouldn't book a specific customer on the Bad Debt line - especially if someone created it as an A/R account instead of as an other asset (or other current asset). 3) Apply the amount from step 2 against the invoice that is no longer collectible. (done using a zero dollar payment) If there's no invoice to apply it against, then what is the allowance that's being used for?
j
well, how the Controller handles these things is above my pay grade. He says its normal that it was done this way. shrug
he is okay with me filtering out the account, but can I do that without creating a second report since the standard AR Aging is whats being used?
when customizing the report - i set a filter for account is not equal to, and i put the bad debt expense account, and the allowance account in there, and when i preview it, it still shows the line...
i see... you ahve to manually filter it out each time you run the report. I think I'm going to have to open a case here
k
You should be able to create a report that has it filtered out by default and able to be run on demand.
j
Journal Entries get "auto applied" in the netsuite aged receivables report if they have the same transaction date. One option might be simply to edit the date on the second transaction to match the first. It can still land in a different accounting period Make sure you don't affect any FX calculations though - Netsuite will try to help you by updating the exchange rate when you change the transaction date
j
So - the solution to this actually was very simple - Accept Customer Payment from the Customer Record, and then change the Recievables Account to the Bad Debt account. This then populated both of the JEs on the Invoice and Credit tabs, then check both of them to apply them both and they net out.
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