Hello michele-eccounti,
It's a pleasure to see you in Community. Welcome! I can understand your concerns when it comes to making changes that could potentially impact your sales tax. In this situation, you are absolutely correct. Any changes made to the original invoice will have a negative impact, in other areas of your books. However, QuickBooks Online enables you to write off the unpaid balance as bad debt. This will ensure that your accounts receivable and net income remain balanced. I would be happy to show you how!
To get started, you'll want to review any other invoices or receivables that would be considered as bad debt. Here's how;
1. Go to Reports and enter Accounts Receivable Aging Detail in the Search field
2. Check which outstanding accounts receivable should be written off
Next, you'll need to create an expense account for 'bad debt', by following these steps;
1. From your Settings ⚙, select Chart of accounts
2. Click on New to create a new account
3. For the Account Type, use the ▼ dropdown menu and select Expenses
4. Using the Detail Type ▼ dropdown, select Bad debts
5. Hit Save and Close
Now let's create a n item for the bad debt;
1. Open your Settings ⚙ and select Products & services
2. Click on New, then Non-inventory
3. Give it a Name, such as “Bad debts”
4. From the Income account ▼ dropdown, select Bad debts
5. Save and Close
Proceed by creating a credit memo;
1. Select + New, then Credit memo
2. Choose the customer from the Customer ▼ dropdown list
3. For the Product/Service section, select Bad debts
4. Enter the Amount you want to write off.
5. Select Save and Close
Here's how to apply the credit memo to the invoice:
1. Select + New, then Receive payment
2. Choose the appropriate Customer from the ▼ dropdown list
3. In the Outstanding Transactions section, select the invoice
4. From the Credits section, select the credit memo
5. Hit Save and Close.
The uncollectible receivable will appear on your Profit and Loss report under the bad debts Expense account. To see a Quick Report for all of the items tagged as bad debt, go to your Chart of accounts, and select Run report, under the Action column for the bad debts account.
If you have any other questions, please don't hesitate to reach out again. We would be glad to help!
