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VACheryl
Level 1

Should we write off unpaid loan that has passed the statute of limitations?

Hi everyone, 

If the unpaid loan is already beyond the statute of limitations, should we remove it from the books? If yes, how do we write it off?

Thanks for the help!

2 Comments 2
Rustler
Level 15

Should we write off unpaid loan that has passed the statute of limitations?

I would write it off

 

Assuming the loan was made to others, and sits in an asset account, a journal entry will do it.

Debit Bad Debt Expense and credit the loan account for the total in the loan account

VACheryl
Level 1

Should we write off unpaid loan that has passed the statute of limitations?

The loan I meant is the company's debt. When writing this off, this will be credit to Other Income, right?

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