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Level 1

how to handle uncollectible debt with cash basis accounting

I use Cash Basis accounting method.  I have customer who will not pay an invoice.  I want to apply credit memo to it.  How do I fill out Credit Memo?  There is some labor that is unpaid and also some supplies that have not been paid for and sales tax is therefore not collectable.  This is not a traditional "Bad Debt" because I am not using the Accrual Method. 

 

Any help would be greatly appreciated!

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Best answer 01-26-2020

Best Answers
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Moderator

how to handle uncollectible debt with cash basis accounting

Thank you for posting here in the Community, @LA Crane.

 

You can follow the normal process on how to create a credit memo and apply it to the invoice. You're on the right path with using this type of transaction to affect Sales Tax reporting as well.

 

Set the date of the credit memo as to when the Write off is happening. Here's how:

 

  1. Click the + New button.
  2. Select Credit Memo.
  3. Fill in necessary information.
  4. Hit Save and close.
  5. Search for the invoice and press Receive payment
  6. Make sure to put a check mark beside the invoice and credit memo. 
  7. Tick Save and close

I also recommend seeking expert advice from an accountant to ensure your books will be accurate. They'll be able to guide how to deal with the invoice without recording them incorrectly in QuickBooks.

 

For additional reference, visit the Enter and apply a credit memo or delayed credit article. It provides the steps on how to create and apply it to an invoice.

 

If there’s anything else I can help you with, click the Reply button and post a comment. I’ll be right here ready to help you. Have a good one.

View solution in original post

2 Comments
Highlighted
Moderator

how to handle uncollectible debt with cash basis accounting

Thank you for posting here in the Community, @LA Crane.

 

You can follow the normal process on how to create a credit memo and apply it to the invoice. You're on the right path with using this type of transaction to affect Sales Tax reporting as well.

 

Set the date of the credit memo as to when the Write off is happening. Here's how:

 

  1. Click the + New button.
  2. Select Credit Memo.
  3. Fill in necessary information.
  4. Hit Save and close.
  5. Search for the invoice and press Receive payment
  6. Make sure to put a check mark beside the invoice and credit memo. 
  7. Tick Save and close

I also recommend seeking expert advice from an accountant to ensure your books will be accurate. They'll be able to guide how to deal with the invoice without recording them incorrectly in QuickBooks.

 

For additional reference, visit the Enter and apply a credit memo or delayed credit article. It provides the steps on how to create and apply it to an invoice.

 

If there’s anything else I can help you with, click the Reply button and post a comment. I’ll be right here ready to help you. Have a good one.

View solution in original post

Highlighted
Level 1

how to handle uncollectible debt with cash basis accounting

Thank you!  I truly appreciate your quick and detailed answer. 

Best regards,

LACrane

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