Lesson 6.7: Write-Offs, Revenue Journal, and Journal Entries

While previous lessons focused on standard daily transactions like paying bills and receiving cash, accountants frequently need to make adjustments to the general ledger. This lesson covers three critical adjustment tools: Write-Offs for uncollectible receivables, the Revenue Journal for recording income without creating formal client bills, and General Journal Entries for adjusting entries like depreciation, accruals, or reclassifications.

Part 1: Write-Offs and Credit Memos

If a client cannot pay their bill, or if a bill needs to be adjusted, you must modify the Accounts Receivable balance. FastFund provides two distinct methods for this: Credit Memos and Reversals.

• Credit Memo: Used when you need to reduce a client’s balance (e.g., writing off bad debt or issuing a credit for returned services).

• Reversal: Used when the original transaction was entered in error and needs to be removed from the client’s history (e.g., a duplicate bill).

Writing Off Bad Debt (Credit Memo): To write off an uncollectible balance to a Bad Debt Expense account:

1. Navigate to Transactions > Accounts Receivable > Revenue Journal (or Client Bills).

2. Options: In the top right Options area, check the Credit Memo box.

3. Header: Select the Client and enter the Date and Amount.

4. Distribution: In the account distribution grid at the bottom, select your Bad Debt Expense account (instead of a revenue account).

5. Save: Once saved, the transaction posts as a credit to Accounts Receivable and a debit to the expense account, reducing the client’s balance.

Part 2: The Revenue Journal

The Revenue Journal allows you to record revenue and receivables without generating a formal “Client Bill” document for the customer. This is ideal for recording grant receivables, program fees, or other accrued income where a printed invoice is unnecessary.

Creating a Revenue Journal Entry:

1. Navigate to Transactions > Accounts Receivable > Revenue Journal.

2. AR Account: Select the control account (e.g., Grants Receivable).

3. Client: Select the funding source or client.

4. Details: Enter the Date, Reference (e.g., Grant ID), and Amount.

5. Distribution: In the grid, select the Revenue Accounts to be credited.

6. Save: This debits Accounts Receivable and credits Revenue, exactly like a Client Bill, but creates no printable invoice for the client.

Part 3: General Journal Entries

Journal Entries (JEs) are used for transactions that do not fit into standard cash, payable, or receivable workflows. These include depreciation, expense accruals, and year-end audit adjustments.

Key Rules for JEs:

• Balancing: Unlike other screens where the system handles the offset automatically, you must manually enter both Debits and Credits. The entry cannot be posted unless total Debits equal total Credits.

• Numbering: FastFund automatically assigns numbers (e.g., J1023-001), but you can override this if necessary.

Creating a Journal Entry:

1. Navigate to Transactions > General Journal > Journal Entries.

2. Header: Enter the Date and a Memo describing the adjustment (e.g., “Monthly Depreciation”).

3. Distribution: Enter the Account, Debit amount, Credit amount, and Project (if applicable) for each line.

4. Save: Use Save & New to continue or Save to finish.

Advanced Journal Entry Features

FastFund offers specialized options for recurring and year-end needs in the Options area:

• Recurring Entries: If you post the same entry every month (like depreciation), check the Recurring box. You can then post it automatically or on-demand in future months.

• Reversing Entries: Used for accruals (e.g., accruing salaries at month-end). Check the Reversing box to have FastFund automatically create a reversing entry on the first day of the next month.

• Year End Entries: Check the Year End box for audit adjustments made on the last day of the fiscal year. This allows you to isolate audit adjustments in reports.