The Happy Accountant

Occaisonally, a bad debt that has been written off may be paid.  If the payment occurs in a later period than the write-off, the amount paid should be recorded (in the period that payment is received) as additional income in the profit and loss account.

If a bad debt has been written off by a VAT registered business, the VAT on the original sale can be reclaimed.  The debt must be older than six months and less than three years and six months.
You include the VAT on the bad debt in input VAT (box 4) of your VAT return.

A bad debt is a debt that is unpaid possibly because the customer has gone bankrupt or more often simply because the customer refuses to pay for some reason.
Whatever the reason, a business may decide that a particular debt is unlikely to ever be paid and thus declare that debt “bad”.

Advantages
Encourages customers to pay early, thus helping cashflow.
Can be used as a marketing device.
Disadvantages
Some customers take the discount without actually paying within the timescale required.

For the purposes of VAT, settlement discounts are treated as a finance charge.  Therefore, VAT is calculated on the net amount (after the settlement discount - regardless of whether the discount is actually taken).

When offering a settlement discount, the accounting entries are:
Credit Sales (with the full amount)
Debit Discounts allowed (P&L account) (with the discount amount)

Sometimes, goods might be unsaleable for one of the following reasons:

the goods might be lost or stolen
the goods might be damaged, and therefore worthless
the goods might become obsolete

When goods are lost, stolen or disposed of, the business will make a loss on them, because they will have zero sales value.
Similarly, if goods become obsolete and [...]

Carriage is the cost of transporting goods from the supplier to the business which has purchased them.  Sometimes the supplier pays and sometimes the buyer pays.
If the supplier pays, the cost to the supplier is called “carriage outwards” and if the buyer pays, the cost to the buyer is called “carriage inwards”.
Carriage inwards is usually [...]

The cost of goods sold is calculated as follows:
                                                                                                       £ 
Opening stock value                                                                  X
Add cost of purchases (or production, if manufacturing)    X
Less closing stock value                                                         (X)
Equals cost of goods sold                                                         X
 That is, to match sales and the cost of goods sold, you need to adjust the cost of goods sold, to allow for increases or decreases [...]

Goods may be unsold at the end of an accounting period and therefore, still be in stock.  The purchase cost of these goods should therefore NOT be included in the cost of sales of the period.
For example, suppose Widgets & Co (who have no stock at the start of the year) purchase 40,000 widgets for £20,000 [...]