Counterfeit bills
20% of our business is cash based. Recently a $100 bill was deemed by our bank to be suspect counterfeit and sent for testing to the US Treasury. The $100 was received for payment of services of $60 (for example) and $40 in change was given. How do we write off the sale? We can obviously write-off the $60 sale - is the $40 just an expense? Thanks.
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Answers
Company: Applabs, Inc.
Beth ~
This is best handled as a bad debt - and the bad debt would be for the full $100. End of the day, it was bad currency that is the problem - not the sale. This has little difference relative to a bad check.
The revenue occured, was recognized and any relevent costs were expensed under the normal course of business. The bad bill is a $100 expense.
Robert