Bad Debts
The amount not paid when a customer fails to pay all
or part of what is owed. A bad debt is a cost of selling on credit and
is considered an expense. Any sales invoice that cannot be collected may
have to be written off.
Writing off bad debts increases the Bad Debts Expense
and the ITC
Adjustments
accounts, and decreases the Accounts Receivable account. If you use QST or PST, it also increases the ITR Adjustments account or
the PST Payable account.
Be sure to review the payment terms and credit limit
of any customer with bad debt. If necessary, modify
the customer's record.