deferred income liability

[debbiek405]

We are a non-profit organization. A number of years ago, a donor gave a sum of money to a vendor to "purchase" a credit for our organization to use. People would pay us for books they wanted to purchase, and we would get them from the vendor, using our credit. We set up this credit as a "deferred income liability" account and also had a matching "Other Asset" account.

Recently, we found out that the company went bankrupt, and could no longer honor our remaining credit account. How do I make an adjustment to zero out the deferred income liability account and the "other Asset" account?

[qbqcca]

If the amounts are the same, just zero them against each other.

[debbiek405]

How would I do that? Just using a general journal entry?

[qbqcca]

Originally Posted by debbiek405

How would I do that? Just using a general journal entry?

A Journal Entry would work.
Sorry I should have mentioned using a J/E in my original answer.