13.7. Accounting For A Bad Debt

Writing off a bad debt is very easy to do in Spike, it is simply a matter of crediting the account concerned but if you also use an Accounts Package, the amount written off will need to be recorded there as well.

Steps to: Write-off A Bad Debt in Spike


  2. Select the account holder whose outstanding debt needs to be written off.

  3. Select HISTORY Tab.

  4. Select CREDIT.

  5. Enter the date the debt is to be written off.

  6. From the Draw-Down Selection list, choose the category for this credit or select the NEW button to create a new category.

  7. Alter the Description if needed.

  8. Enter the amount to be credited (the amount of the bad debt).

  9. Select OK.

  10. Select the transaction that you wish to apply the whole or part of the money to, and press ENTER or Double click in the corresponding white box.

  11. Repeat this process until you have applied all the money and all outstanding amounts are paid off.

Once the amount has been credited (written-off), you will need to do a Journal Entry in your Accounts Package. This is because a Bad Debt is an expense to your service and it will need to be listed in your Profit & Loss Statement. It is good practice to budget for Bad Debts.

Steps to: Record the Bad Debt in your Accounts Package

  1. Go to the 'General Journal' area of your Accounts Package.

  2. Enter the amount of the bad debt as a debit to the 'Bad Debt (expense)' account.

  3. Then enter the amount of the bad debt as a credit to the 'Accounts Receivable' account.

The amounts entered MUST be the same.

By doing this Double Journal Entry, you have increased the amount of the Bad Debts listed in the Profit & Loss Statement, and reduced the amount owing in the Accounts Receivable.