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Angeatwork
Level 2

Entry required for loan receivable write off.

Can someone tell me how to write off a loan receivable (I loaned money to employee and decided to forgive it as a christmas bonus) as a bad debt?

2 Comments 2
Catherine_B
QuickBooks Team

Entry required for loan receivable write off.

We’ll need to create a bonus check, Angeatwork.

 

Bonus checks are subject to normal tax deductions, including state and federal taxes. We can either create it on a separate paycheck or a regular one.

 

We’ll need to create a payroll item first to offset the employee’s loan balance. Let me show you how:

  1. Go to the Lists menu and click Payroll Item List.
  2. Click the drop-down beside Payroll Item and select New.
  3. Select Custom Setup and then Next.
  4. Click Deduction and Next again.
  5. Follow the on-screen instructions.
  6. Let’s make sure to choose the loan account under the Liability account (employee-paid).
  7. Select to calculate it on the employee's net pay.
  8. Click Finish.

Create a bonus paycheck depending on how you'll want to record it. Select these options on the Paycheck window: 

  • Earnings: Bonus
  • Other Payroll Items: deduction payroll item

Please reach out to me if you need more help handling your employee's pay. 

Angeatwork
Level 2

Entry required for loan receivable write off.

I don't want to create a bonus paycheck.  Isn't there just some entry I can make to reverse the loan I made?

 

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