It may happen that the debts, which were previously written-off as bad debts or irrecoverable debts, are recovered. In most cases, only a portion of the amount in respect of bad debts already written-off is recovered.
- This amount of bad debts received would be entered in the Receipts Journal.

There are two ways in which the Bad Debts Recovered transaction in the Receipts Journal may be allocated:

1. The amount could be allocated directly to the Bad Debts Recovered account. This is an Income account.
   - This is not generated from normal business activities, and this account should be linked to an Other Income Account Group.
   
   
2. The amount could be allocated directly to the Debtor’s account. This will create a credit balance in the Debtors Account. To clear this credit balance, another transaction needs to then be entered, to transfer the amount received (credit balance) from the debtor’s account to the bad debts recovered account.
   - It is recommended that the latter method be used, since you will have a complete record of the transactions (the original write-off and the recovery of the bad debts) in the detailed debtor transaction report for the debtor’s account.
   
   

To Enter Receipt Transactions for the Recovery of Bad Debt:

1. Click on the Batch Entry icon, or click on the Input→Batch Entry menu option.
   - Keyboard Access: Press the F2 key on your keyboard. Alternatively, press the Alt+I+B keys on your keyboard.
   The Batch Type Selection screen will be displayed.
2. Select the Receipts Journal.
   - If you have more than one bank account, select the correct Receipts Journal for the bank account into which the moneys is deposited.
   
   
3. Click on the Open button. The Batch Entry Transaction screen for the Receipts Journal is displayed:
   
   - If you have not yet set the Receipts Journal up, or if your requirements should change, click on the F10: Setup icon, or press the F10 key on your keyboard.
   
   - The contra account of the Bank Account to which the Receipts Journal is linked, will be displayed on the Batch Type Selection screen. You cannot change the contra account in the batch setup options for the Receipts Journal.
   
   - Note that for Receipts (Deposits), the Amount Entry field should be set to credit.
   
   
4. Capture the Recovery of Bad Debts from the Deposit slips or Receipts. You need to record the deposit number, date of the transaction, details of the transaction, and select the debtor account. If VAT/GST/Sales Tax was applicable when you have written-off the original debt, you need to select the bad debt tax code. You also need to enter the amount in the credit column:
   1. The amount Received and Deposited - Including VAT/GST/Sales Tax -You need to record the deposit number, date of the transaction, details of the transaction, select the Debtor Account and select the VAT/GST/Sales Tax -Bad Debts Tax code and enter the amount in the credit column.
   2. The amount of Bad Debts Recovered - Excluding VAT/GST/Sales Tax - To enter the bad debts recovered, use the same reference numbers, select the Other Income Account (i.e. Bad Debts Recovered), select the No Tax code, and enter the amount in the credit column.
      To create the Debit transaction to the Debtor’s Account, use the same reference numbers, select the Debtor Account, and select the No Tax code, and enter the amount (excluding VAT/GST/Sales Tax).
      - Since the Receipts Journal is set to allow a credit amount entry only, you need to enter a negative (”-” minus sign) before you type the amount in the credit column. As soon as you press the Enter key on you keyboard, TurboCASH will automatically transfer the amount to the to debit column.
      
      
5. After entering the transactions for the recovery of bad debts in the receipts journal, it will be displayed as follows:
   
   
6. Click on the F5: Balance icon, or press the F5 key on your keyboard, to list the batch. Balancing transactions will be generated to the Bank Account and the Output VAT/GST/Sales Tax Account.
7. TurboCASH will generate balancing entries to the Bank Account (contra account), and to the Output VAT (GST/Sales Tax) Account, if a Tax Code was selected for a transaction.
   
   - If the Consolidate Balancing option is selected in the Setup Options for this batch, the description for the balancing entries or transactions, will be displayed as “BALANCING ENTRY Receipts Jnl”.
   
   - It is a good idea to over type this description, as it is not very meaningful to an outside auditor or accountant. If you over type these, it will definitely make it easier to trace and reconcile transactions.
   
   
   
   • Over type the description with “Deposit Slips D8001” in the description column.
   • Over type the description with “VAT (GST/Sales Tax) on Bad Debts Recovered” in the description column.
   • Do not over type the eight asterisks in the reference column, as this indicates that these are contra transactions.
     - If you have selected a Tax code, in the Cash Book (Receipts Journal and Payments Journal), the amount EXCLUSIVE of VAT/GST/Sales Tax (NOT the INCLUSIVE of VAT/GST/Sales Tax) is reflected in the amount column, when the cursor is not on the amount field of a transaction.
     
     
8. Click on the F9: Process icon, or press the F9 key on your keyboard, to change the alias (batch name).
   - This will help you if you wish to identify a specific batch to generate a batch type report, or if you wish to export posted batches to a file.
   
   
9. Click on the F8: List icon, or press the F8 key on your keyboard, to list the batch.
   - It is a good idea to list the batch, and check the entries on the batch thoroughly. If there are any errors, you may edit the batch, before posting the batch.
   
   
10. Click on the F6: Post icon, or press the F6 key on your keyboard, to post (update) the batch to the ledger.

After posting the transactions, the T-Account View of the transactions should reflect as follows:

1. Debtor’s Ledger:
   
   The total amount, excluding VAT (GST/Sales Tax) - Bad Debts is debited and credited to the Debtor’s Account. This is for record purposes.
   
2. Gerneral Ledger:
   
   The total amount, excluding VAT (GST/Sales Tax) - Bad Debts is credited to the General Ledger Income Account.
   
   The full amount, including VAT (GST/Sales Tax) - Bad Debts received or recovered is debited to the Current Bank Account.
   
   The VAT (GST/Sales Tax) - Bad Debts is credited to the VAT (GST/Sales Tax) - Bad Debts Account. This amount needs to be submitted on the VAT/GST/Sales Tax return and paid the Tax Authority.

- Debits - Bank (Including VAT/GST/Sales Tax) = Credits - Income (Bad Debts Recovered) + VAT (GST/Sales Tax)