Negative amounts on Customer age analysis

[CuriousEL]

Hi,

We have some debtors account reflecting small negative amounts i.e the customer overpaid (R100 here & there)..
It's been on our age analysis for awhile even dating back to 3 years. We have sent a letter to all these debtors requesting their bank details in order for us to refund them but we've received ZERO replies. Unbelievable right?

Anyway I just wanted to know if there is a way of writing this off from the debtors book??

[Neville Bailey]

Yes, you can.

You will need to process a Customer Journal, debiting the customer account and crediting a general ledger account of your choice, perhaps Sundry Income. You can use a narration along the lines of "Unclaimed overpayment by customer".

[CuriousEL]

Thanks Neville.
I was thinking of doing this but is this an acceptable accounting procedure?
I don't know why I feel like I would be "stealing" the money if i move it to an income account...

[Neville Bailey]

If it bothers you, then perhaps open a Suspense account in the Balance Sheet and transfer the amounts there, so that they don't reflect as income, but rather as a potential liability.

[CuriousEL]

Thanks Neville

[EAB]

What usually happens is that the overpayments will be kept on the age analysis for 3 years, after that the amounts will be written off to the income statement. As per Neville's first comment.

You are not stealing the money, you intended to pay pay the money but they didn't respond to your requests, seems like they don't want it. And if they didn't claim it after 3 years it will be highly unlikely for them to claim the money at all.

I understand what Neville is saying, but it will not really be a liability because the you most likely will never pay the money back (not because you are stealing, but you can't get details to refund it). So if you show a liability it will be something that gets moved from the debtors to another balance sheet account and never gets cleared.

Remember that if you are VAT registered you need to declare the amounts that was written off to the income statement

[CuriousEL]

This is helpful many thanks Werner