Accounts Receivable Write-Off Approval Form
What this document covers
The Accounts Receivable Write-Off Approval Form is a document used by businesses to formally request the write-off of an unpaid account receivable. A write-off indicates that the value of an asset, such as a customer's debt, has decreased or become uncollectible. This form is essential for maintaining accurate accounting records and differs from similar forms by specifically targeting the approval process for writing off receivables rather than general debt collection or acknowledgment forms.
What’s included in this form
- Reason for the write-off: A section where the manager explains the justification for writing off the account.
- Collection procedures: Details the steps taken to collect the outstanding debt before considering it a write-off.
- Signature of responsible manager: An area for the responsible manager to sign, indicating approval of the write-off.
State law considerations
This form is suitable for use across multiple states but may need changes to align with your state’s laws. Review and adapt it before final use.
Common use cases
This form should be used when a business decides to write off an account receivable as uncollectible after exhausting reasonable collection efforts. Situations may include circumstances where a customer has gone bankrupt, where there has been no communication or payment after repeated attempts, or when the cost of continued collection exceeds the amount owed.
Who this form is for
- Business owners looking to maintain accurate financial records by officially documenting write-offs.
- Accountants or financial managers responsible for overseeing accounts receivable and collection processes.
- Financial officers needing to authorize write-offs following established company policies.
How to prepare this document
- Identify the account: Provide details about the account receivable intended for write-off.
- Enter the reason: Specify why you wish to write off the account in the designated area.
- Detail collection efforts: Outline the collection procedures that have been taken thus far to recover the debt.
- Signature: The responsible manager must sign the form to confirm that the write-off has been approved.
Is notarization required?
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
Typical mistakes to avoid
- Failing to provide a complete justification for the write-off, which could lead to rejection of the request.
- Not adequately documenting prior collection efforts, which is critical for supporting the write-off.
- Forgetting to obtain the necessary manager's signature, making the form invalid.
Advantages of online completion
- Convenience: The form can be downloaded and completed at any time, making it easy to manage written-off accounts promptly.
- Editable: Users can easily fill out and modify the form as needed, ensuring all information is accurate and up-to-date.
- Reliable: Using a professionally drafted form ensures compliance with appropriate accounting practices and legal standards.
Form popularity
FAQ
The entry to write off a bad account affects only balance sheet accounts: a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. No expense or loss is reported on the income statement because this write-off is "covered" under the earlier adjusting entries for estimated bad debts expense.
Set up your Excel sheet to include Invoice Dates in column A, Invoice Numbers in column B, and Due Dates in column C. Add a column for Total Amount Due in column E and add the corresponding information. In cell J3, the first cell under the Balance Due column, add the following formula: =E3-SUM(F3:I3).
The formula looks like the following: Step 1: Beginning accounts receivable + ending accounts receivable / 2 = net accounts receivable. Step 2: Net credit sales / accounts receivable = accounts receivable turnover.
An example of accounts receivable includes an electric company that bills its clients after the clients received the electricity. The electric company records an account receivable for unpaid invoices as it waits for its customers to pay their bills.
To record a journal entry for a sale on account, one must debit a receivable and credit a revenue account. When the customer pays off their accounts, one debits cash and credits the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is usually a debit.
