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    jocs321's Avatar
    jocs321 Posts: 1, Reputation: 1
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    #1

    Jun 13, 2008, 07:33 AM
    Recording Legal Settlement Fees and Payments
    After taking a client to court the settlement is paid directly to the lawyer. If we settle for $1000 on a particular client the lawyer will take his $300 and send us a settlement check for $700 to apply towards the clients account. How do I clear the $300 balance on clients account considering it was paid by client at settlement, it was just kept by lawyer for his fees. I don't know what to debit and what to credit.

    Thanks
    Donna
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Jun 13, 2008, 05:13 PM
    You would…

    Dr. Cash 1,000
    Cr. A/R – Client 1,000

    Dr. Legal Fees/Expense 300
    Cr. Cash 300

    You can write the above 2 JE as just 1 entry, netting the cash amount. I just broke it out so you can see it more clearly.
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