How to make journal entry of write of Trade receivable or trade payable

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This discussion explains how to create journal entries for writing off trade receivables and trade payables. For trade receivables, the entry involves debiting bad debts and crediting trade receivables. For trade payables, it's typically a debit to trade payables and a credit to other income, treating the unpaid amount as income. The conversation also clarifies that GST should not be reversed in both cases, but only the Input Tax Credit (ITC) claimed on trade payables needs reversal.

Daya

Daya (Querist)
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25 January 2025 How to make journal entry of write off of Trade receivable or trade payable
if Trade receivable and Trade payable for Rs. 1,18,000 and 1,18,000 each respectively. please reply.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 January 2025 Bad debts write off dr 1,18,000
To trade receivable cr 1,18,000
(Bad debts written off)

Trade payable dr 1,18,000
To other income cr 1,18,000
(Trade payable not paid treated as other income)

Daya

Daya (Querist)
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25 January 2025 sir,
Trade receivable and trade payable inclusive GST amount,
in the above mentioned amount Rs, 18,000 GST in the both case,
whether GST should be revised in the both Case ie.
RS. 18,000 should be credited in the case of write off Trade payable
Rs, 18,000 should be debited in the case of write off Trade Receivable.
please reply
whether should be rev

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 January 2025 In case of both GST need not be reversed.
Only ITC claimed on trade payable is to be reversed.

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