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I loaned my father $20. This is how I recorded the transaction in GnuCash:

Account Debit Credit
Assets:Loans:Father $20
Assets:Banks:USD $20

Now, I want to forgive the debt. What entries should I make in GnuCash to write off the debt? I know that the "Assets:Loans:Father" account should be credited to erase the debt, but what account should I debit to balance the credit?

Account Debit Credit
??? $20
Assets:Loans:Father $20

2 Answers 2

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You'd debit "Bad Debt Expense" or comparably named expense account.

Edit: I like glglgl's idea of the same account as gifts to keep number of accounts low, it's really just a matter of whether or not you want to track this sort of unintentional gift separately or not.

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  • I didn't understand it as "unintentional", I read "Now, I want to forgive the debt." as "I don't need to, but I do it voluntarily". But at the end, it's a matter of personal opinion.
    – glglgl
    Commented Jul 26, 2022 at 6:44
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You use the same expense account you would use for a gift.

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