Written off item

@ 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 )  

Trade creditors write off  A/c   will be under head  Indirect  Income (  P&L account )