A/c Payable

[melloby]

Hi,

I have an accounting ?. I have an A/c payable balance of 1000.00 payable to a company that provides a sevice to us.

However, the company decides to the forgive the debt and cancel this amount from their A/c Rec'd file.

How do I clear the A/c Payable in our books?

Thx
melloby

[Matt]

I assume from your question that you have this payable recorded as a liability in Powerchurch. If so, and if the liability was originally recorded in a previous fiscal year write the payable off by making the following entry:

Debit Accounts Payable
Credit Unrestricted Net Assets

If the liability was originally recorded in the current fiscal year, look up the posting to find out what the debit account (i.e. expense) was. Then, write off the payable by making the following entry:

Debit Accounts Payable
Credit Expense Account