Prior to GST03 submission, you need to make sure all invoices and payments to be updated and reconciled. Here’s how you create Bad Debt Adjustments for AJS in Xero.
3 Oct 2016 – Issue sales invoice (INV-0328) amounting RM 106.00 (including GST).
31 March 2017 – The sales invoice (INV-0328) is still outstanding. Therefore expires (6th month).
30 April 2017 – To make adjustment on bad debt for INV-0328.
31 May 2017 – Customer paid for INV-0328.
Step 1 – Identify Outstanding Sales Invoices
Generate Aged Receivables Summary Report in Xero to identify which invoices that are outstanding.
Aged Receivables Summary will show lists of outstanding sales invoices that are due. You may refer to Outstanding Tax column to see GST amount that needed to be reversed. Next step will be to create a Manual Journal.
Step 2 – Create Manual Journal
To create a Manual Journal, go to Adviser>Manual Journal>New Journal.
Create a Manual Journal as follows:
Tips: Create GST – AJS Adjustment Account in Xero chart of account. Learn how to add an account to your chart of account here.
Next is to upload Aged Receivables Summary report into the Manual Journal as reference.
Step 3 – Reversal of Manual Journal
When the outstanding sales invoice has been paid, like this example, it is being paid on 31 May 2017. Learn more on how to update payment for your sales or bills here.
Go back to the Manual Journal and select Journal Options and select Reverse. Select Post.
With this reversal, the GST – AJS Adjustment Account will be reversed as follows: