Write-Offs
At write-off time we may refund credit balances. The refunding of credit balances is handled by A/P adjustments and these have cash accounting processing as described under Cash Refunds.
If we have to write-off debt, holding balances are relieved in proportion to the amount of debt that is written off (as usual). It's important to understand that for this to work, you must set up the system as follows:
• The tax holding distribution codes must have their override distribution switch turned on.
• The distribution code on the SA type associated with the service agreement to which the written-off payables are transferred must be the REAL payable distribution codes. This is important so that if the customer pays after the payables are reversed, we will be able to debit cash and credit the REAL payable distribution code.
Let's run through an example to illustrate this.
Event
Normal SA GL Accounting
Write Off Revenue SA GL Accounting
Reverse Liabilities SA GL Accounting
Bill segment created
A/R 110
Revenue <100>
Tax Holding <10>
Write Off Time
Reverse the held payables
Xfer 10
A/R <10>
Tax Holding 10
Xfer <10>
Note, the tax holding only gets debited if you have turned on the override at write-off switch on its distribution code
Write off revenue
Xfer 100
A/R <100>
Write Off Expense 100
Xfer <100>
If the customer subsequently pays
Cash 100
Write Off Exp <100>
Cash 10
Tax Payable <10>
Note, the tax payable only gets credited if the SA type's distribution code has been defined as such