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Written off item

04 September 2020

If we have not paid the amount to our creditors and we just write off that amount ...
can we show this as our income under profit and loss a/c under indirect income????

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4 Replies

Akshay raj Sahani (15 Points)
Replied 04 September 2020

The entry would be sundry creditors A/c Dr
to Discount received A/c and that is an indirect Income. so your liablity would be directly added to your Capital just by defaulting creditors!!

RITU RAJ (2 Points)
Replied 05 September 2020

What is written off account and example of it

prasad Nilugal ( GST Practitioner & Accounts ) (14169 Points)
Replied 05 September 2020

@ Ramya Bhat

Normally we write-off after 3 to 4 years but you check out current rule regarding write -off and then you pass entries as follows to write-off creditors

1) your first entry in the Books before write -off

Expense A/c Dr

To Trade Creditors A/c Cr

( Booking entry )

2) When you are going to write-off

Trade Creditors A/c Dr

Trade Creditors written -off A/c Cr

( Creditors write off )

3) Trade creditors write-off Transfer to profit & loss Account as Indirect Income

Trade Creditors written-off A/c Dr

To Profit & Loss A/c Cr

( Transfer to profit & Loss A/c as Income )