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Counterfeit bills

Beth Long's Profile

 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.

Answers

Robert Gushue
Title: Controller
Company: Applabs, Inc.
(Controller, 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

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