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Bad Debt Configration

Bad Debt Configration

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Published by Naresh Kumar Dash

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Published by: Naresh Kumar Dash on Oct 12, 2012
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12/07/2012

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BAD DEBT CONFIGRATION
 
Bad debt configuration is done in SAP through 'value adjustment'. You can create a special GL transaction witha new reconciliation account for posting the value adjustment. When it is clear that the bad debt is no morecollectible, pass a manual entry 'expenses for value adjustment Dr.' and 'valud adjustment Cr.'The procedure for Bad debt configuration:-Define Methods: SPRO / Financial Accounting / Accounts Receivables & Payables / Business transactions /Closing / Valuate / Reserve for bad debts - OB04- Double click define methods- Select New entries buttonSaveCreation of Bad Debts Account: FS00Co.code: XXXX - Select with template button G/L A/c:XXXXXX Co.Code : XXXXAccount group: Administration -Select P & L Radio buttonShort text: Bad debts Long text: Bad debts - Select control tab button Currentcurrency: INR- Select only local currency check box - Select line item check box, Sort key:001 Field statusvariant: G001 - SaveDefine Accounts for Reserve & Bad Debts: - OBXDSPRO / Financial Accounting / Accounts Receivables & Payables / Business transactions / Closing / Valuate /Define Accounts for Reserve & Bad debtsChart of Accounts: XXXXPROVISION METHOD DEBIT CREDITXXX XXXXXX XXX XXXSelect rules tab button Accounts are determined based on - Select Debit/Credit check box 40/50- Selectprovision method check box- SaveSpecial G/L Account: - FBKPDouble click Special G/LAccount Type Special G/L Special G/L Indicator D E Reserve Reserve for Bad debts
 
 Double click ReserveChart of Accounts Account Assignment Reconciliation A/c:XXXXXX (SD) Spl.G/L-XXXXXX Save Accounting / Financial Accounting / Accounts Receivable / Periodic processing / Closing / Value / Receivabletransfer posting (Gross)Customer A/c:XXXXXX Provision method: XXXXSpecial G/L Indicator for Debit Rec: E (Reserve for bad debts)-Select create batch input session check box- Batch input session name: SAPF103 - Posting Key:09 Posting document: DA - F8From the menu Select ->System -> Batch Input -> Session- Select batch input session: SAPF103 Select process - Select display errorsonly V - Select process button - Exit Batch inputProvision for Bad and Doubtful Debts in SAP FI You need to create1. one alternative recon account for Special GL indicator "E"2. One expenses account for bad debts and3. one for provision on Doubtful debts account.Configuration:SPRO-AR&AP-Business transactions-Closing-Valuate-Reserve for Bad debt.
 
1.Define MethodsHere you need to define methods means after how many months client want to reclassify asbad debts and at percentage for how many months.2.Define Accounts for Reserve for Bad DebtHere you need to assign bad debts expenses account and provisionaccount.User end transactions:1. Run F103:It transfers the normal open items to special gl E.Entry:Customer account SP gl EdebitedCustomer account2. After F103 you need to F104 for bad debts postingBased on the percentages maintained for how manymonths. System will automatically calculates the bad debtsEntry:Bad debts DrProvision CR.The above steps are for automatically calculation of Bad Debts.If client doesn't want then tell them to pass manual entries.
Notes:
  You need the following settings for SP GL transactions1. SP GL indicators- You can use any of the existing available indicators2.OBXY in case of customers-Assign these indicator for the combination of account type and customerreconciliation account. You also need alternative reconciliation account to capture these transactions3. OBXT in case of vendors.

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