Title: Write off bad debts in QuickBooks desktop and online
1Write off Bad Debts in QuickBooks Desktop and
Online
Write off bad debts is a common thing in
accounting and bookkeeping. The same task is
carried out in QuickBooks accounting software as
well. To write off bad debt on QuickBooks
desktop or online, certain steps can be followed.
Writing off bad debts is a must, as the user
might face issues during the bank reconciliation
and it will also assist in avoiding
discrepancies and profit/loss statements. By
writing off bad debts in QuickBooks, one can
clear the invoices from the account receivables
that assist in getting the appropriate profit
amount. Considering the importance of writing
off bad debts in QuickBooks, we have come up with
this piece of information. Thus, keep reading
further to elevate your understanding of writing
off bad debts in QuickBooks.
What is meant by Bad debts? Bad debts mean an
amount that is unable to recover from the debtor.
The debtor is the one who owes you some amount
of money i.e. the borrower. When the debtor is
unable to pay the amount, it is termed as bad
debt. Debt issues can affect the profit and loss
reports while reconciling the accounts in
QuickBooks. Bad debts relate to the account
2- receivables and are referred to as
non-collectible accounts. In case the business
uses the accrual method of accounting, bad debts
can be written off as a deduction. Writing off
bad debts assures the accounts receivable and net
revenue stay updated. - All-in-all bad debt is a terminology that is used
when the user sells goods on credit, and the
customer didnt pay. The entire process to write
off bad debts in QuickBooks is discussed later
in this article. - Steps to write off bad debt in QuickBooks desktop
- If you are a QuickBooks desktop user, then the
steps listed below would surely help you in
writing off bad debts in QuickBooks Desktop. Let
us explore the steps carefully - Step 1 Creating an expense account named bad
debt - In this step, the user is required to move to the
lists in the top navigation bar and then choose
the company option - After that, the user is required to navigate to
the chart of accounts - The next move is to build a new expense account
by Selecting on the Account tab and then click
new - The user is then required to select expenses
- Once done with that, type in bad debt in the
account name field and also choose the save and
close tab. - Step 2 Recording and Closing the bad debt
- After obeying the above move, the user is
required to pick the receive payments tab in the
customer-list - Followed by entering the customers name in the
received form and 0.00 in the payment amount. - Important point In the description, the user can
write the invoice number of the bad debt for
tracking. - The next move is to tick on the discount
credits tab
3- Also, write the volume of bad debt the user wants
to write off in the amount of discount section. - Now, in the discount account, the user is
reckoned to collect the bad debt account that
was produced in the above move - The last step here is to click on the save and
close tabs.
- Steps to write off bad debt in QuickBooks Online
- The above steps were only for QB desktop users.
Though, if you are QuickBooks online user, then
the actions posted below would be suitable for
you if you need to write off bad debts in
QuickBooks online. - Step 1 Review the old report for Accounts
receivable - The very first thing that one needs to do before
writing off the bad debts in QuickBooks online
is to review the aging report for accounts
receivable. This can be done as follows - The user is recommended to use the left side menu
for opening the reports section - Once done with that, the user is supposed to open
the search bar
4- View for the account receivable aging record from
the search bar - And then, check the outstanding receivable
account. - The user should also tick on the accounts
receivable aging expansion report. - Step 2 Making of bad debt account in QuickBooks
- In this move, tap on the setting icon from the
company section. - Followed by selecting the chart of accounts tab
- The next action is to select the option to
generate a new account - And also, tick on the expenses option from the
account font drop-down list - Once finished with that, the user needs to select
all the bad debts from the expansion type
drop-down list and also write in bad debt in the
name field - The final action is to hit on save and close to
finish this process. - Step 3 Installation up a service/ product bad
debt item - For this, the user is required to click on the
gear icon and also choose the product and
services tab from the lists section - Now, tick on the new product, and later from the
product/service data section, tick on the
non-inventory tab - The next action is to write bad debt in the name
text box - Followed by selecting bad debt expenditure
created in the income account section - Once done with that, the user is supposed to
unmark the Is Taxable check-box
5- The next action is to choose the item that has
been built for the bad debt in the
product/service area - Once done with that type in the amount of the bad
debt/unpaid invoices with positive values - Move ahead to the memo text box and also type in
the bad debt amount - The last step here is to click on the save and
close tabs. - Step 5 Executing the credit memo to enforce
credits - The user needs to start the process off by
clicking the plus tab on top of the screen and
then move to the received payment from the
customers section. - Later that, Select the client from the drop-down
menu - And also select the invoice to be written off
from the Arrear transactions list - Now, choose the credit memo that was created from
under the credits section - The next step is to run a check and affirm that
the amount reflecting in that section is 0.00 - Towards the end, the user needs to click on the
save and close the tab and you are good to go. - To wrap it up!
- This was a prolonged discussion about the process
to write off bad debt in QuickBooks. After
scrutinizing this article, we assume that you
might be able to write off bad debts in
QuickBooks successfully. - Despite that if you are confused regarding
writing off bad debts or if you are stuck at any
stage, then have a one-on-one conversation with
the QuickBooks pro support team and certified
accounting professionals.