How do I account for a unit written off?
Contents
Summary
This article will explain how to account for writing off a unit from Unit Sales and altering the values in the accounts.
More Information
 | Units: Unit is a general term used to cover all types of vehicle and machinery, including items such as motorcycles, scooters, cars, trucks, vans, caravans, motorhomes, boats, tractors, ATVs, agricultural equipment, wholegoods and construction equipment. |
As the summary states, there are two things to do in order to write off a unit from the system.
Showing the unit as being Written Off
You will need to show that the unit has been written off in the Unit Sales system.
- Go to " Unit Sales Add or Edit Units".
- On the "Search on:" enter the unit in question and press <Enter> to list the unit.
- Press <F5> or click [Edit] to edit the unit.
- Set the "Status:" to 'WRO' (you may need to create a new code. If so make sure it is a non-stock status - see How do I create a unit status?).
- Click on the [Details] tab and in the "Notes" section enter in that the unit has been written off, when, how and if possible by whom.
- Go to the [Purchase] tab and set the "Valuation Excluded?" flag to 'Yes'.
- Click [Done] and [Accept].
 | The system will immediately reverse the journal holding the unit in stock i.e. Credit Unit Stock Value (usually 70001/71001) and Debit Unit Accruals (usually Z940). If there are any expenses against the unit these will also be reversed to Credit Stock of Expenses (usually 70101/71101) and Debit Expense Accruals (usually Z944). |
- You should now deal with the postings made to take the unit out of your stock.
Writing Off the Value of the Unit
Make sure you know the postings made so you understand which centres you need to Credit in order to Debit your Profit & Loss with the Write Off.
- Use Nominal Review to view any postings made on today's date. You can enter the unit stock number into the "Filter on" field to help you to find the postings made.
- Make sure you have a 'Unit Write-Off' Nominal Centre.
 | If you do not have a 'Unit Write-Off' centre, you will need to create one making sure that you set the "P/L indicator" to 'Cost of Sales'. See How do I create a nominal code?. |
Post a Multiple Entry journal to account for the write-off.
- Go to " Nominal Ledger Journal Entries Multiple Entry".
- Enter the "Date" of the write-off.
- Enter your Unit Accruals centre e.g. Z940.
- Under the "Credit" column enter the amount to write off i.e. the value posted to the accruals centre by changing the status of the unit.
- Enter a "Comment" e.g. Unit 1234 Write-Off
- On the next line of the journal enter your Write-Off nominal centre.
- Under the "Debit" column enter the amount to write off i.e. the value posted to the accruals centre by changing the status of the unit.
- At "Comment" press <Ctrl+F6> to repeat the comment from the line above.
- If the unit had expenses associated to it, repeat the above but using the Unit Expenses Accrual and the Write-Off nominal centre. Make sure you Credit the Expense Accrual code unless the unit only had positive expenses associated to it e.g. bonuses, in which case you would Debit the Unit Expense code and Credit the Write-Off code.
- Click [Done] and [Accept].
This posting should have the effect of reducing the value of your stock on the accounts by the cost of the unit concerned, and increasing the cost of sales in the month in question by the same amount hence reducing your profit in that period.
Accounting for Insurance Money received
In order to account for any insurance money received for the unit written off, you will need to know the Nominal Centres for your 'Unit Write-Off' and 'Bank Account'.
- Go to " Nominal Ledger Journal Entries Cashbook Entry".
- Select "Money in"
- Enter the "Centre" for your bank account.
- On the next line enter the centre for the Unit Write-Off.
- Enter the "Date" that you received the payment from the insurance company.
- At "Credit" enter the value of the insurance payout.
- At "Comment" enter a suitable comment e.g. Unit 1234 Ins Payout.
- Click [Done] and [Accept].
This posting should have the effect of reducing the value of Unit Write-Off on the accounts by the insurance pay out of the unit concerned, and decreasing the cost of sales in the month in question by the same amount hence restoring your profit in that period.
See also
- How do I create a nominal code?
- How do I search for units that are in stock?
- How do I exclude units from my stock valuation?
- Creating a used unit
- Creating a new unit
- Creating a new unit by copying an existing unit
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