Consider this simple scenario, where I am running the accounts for a small business. No need to get into fancy standards (e.g. GAAP).
- A vendor sends my company a bill for $100. The work is complete and satisfactory.
- I record the bill in GnuCash but delay processing payment (no cash in hand). It is posted to accounts payable.
- A month later, as part of some other deal, the vendor cancels the bill (i.e. gives me 100% discount). In effect I no longer need to pay him that bill.
How should I record this transaction?
Unpost the bill and pretend the work never happened.
I dislike this because I want to have a record of all the work that was done, and the fact that we got a discount (e.g. IRS might want to see this).
Process bill and add 100% discount so in effect no payments are made. However, in the
Process Payment window, if I enter the amount of $100, and also a refund of $100, the
Transfer Account window grays out, and nothing is recorded. Effectively, GnuCash does not accept 100% discounts.
Other Income with $100, and debit
Accounts Payable. This works in the sense that my company is receiving a "gift" that reduces AP. But the problem is that I still have the vendor bill outstanding. That is, it shows up if I go to process new bills from said vendor.
Any other ideas?