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gloriadeb204
Level 2

bad debt write off

I wrote off a bad debt in ihe GJ as shown.

When I run an aging report, it shows up as a positive and a negative. How do I get it to not show up at all on anGJ.png  aging report? 

 

Solved
Best answer 4 weeks ago

Best Answers
AlexV
QuickBooks Team

bad debt write off

Hello gloriadeb204!

 

The reason why it shows positive and negative lines is because of the method you used, the journal entry. Let me show you how to properly write it off as bad debt.

 

Based on the screenshot, I'll assume you already have an expense account to track the bad debt. If so, proceed to these steps:

  1. From the Customers menu, select Receive Payments.
  2. Select customer in the Received from drop-down, and enter $0.00 in the Payment amount.
  3. Click the Discounts and credits button. 
  4. On the pop-up, enter the amount you'd like to write off in the Amount of Discount field.
  5. For the Discount Account, select the bad debt expense account.
  6. Tap Done, then Save & Close.

 

Once done, pull up the A/R Aging report again to verify.

 

Need more references on how to manage your business in QuickBooks Desktop? Check this link: QBDT All Articles.

 

Leave a reply below if you more of my help. I'll be here!

View solution in original post

8 Comments
AlexV
QuickBooks Team

bad debt write off

Hello gloriadeb204!

 

The reason why it shows positive and negative lines is because of the method you used, the journal entry. Let me show you how to properly write it off as bad debt.

 

Based on the screenshot, I'll assume you already have an expense account to track the bad debt. If so, proceed to these steps:

  1. From the Customers menu, select Receive Payments.
  2. Select customer in the Received from drop-down, and enter $0.00 in the Payment amount.
  3. Click the Discounts and credits button. 
  4. On the pop-up, enter the amount you'd like to write off in the Amount of Discount field.
  5. For the Discount Account, select the bad debt expense account.
  6. Tap Done, then Save & Close.

 

Once done, pull up the A/R Aging report again to verify.

 

Need more references on how to manage your business in QuickBooks Desktop? Check this link: QBDT All Articles.

 

Leave a reply below if you more of my help. I'll be here!

View solution in original post

BigRedConsulting
Community Champion

bad debt write off

This happens when the journal isn't linked to the invoice it's writing down. Same thing will happen if you record a Payment received transaction and don't apply it to invoices.

To complete the transaction, open the Receive Payments window, select the customer, and then apply the outstanding credit to the open invoice(s).

gloriadeb204
Level 2

bad debt write off

Thank you

I will do this when I'm at work tomorrow. 

SInce 2020 is at our acountants for tax purposes, will this change anything or affect the financials?

gloriadeb204
Level 2

bad debt write off

Thank you.

I will do this tomorrow when I get to work.

Since 2020 financials are at our accountant, will doing this affect the financials?

Rose-A
Moderator

bad debt write off

Yes, doing this will affect your financials, gloriadeb204.

 

In any case, accounting write-offs serve two purposes:

 

  • Firstly, write-offs support accounting accuracy objectives.
  • Secondly, the "write-off" creates tax savings for asset owners. These actions reduce tax liability by creating (non-cash) expenses that result in lower reported income.

 

This process ensures your accounts receivable and net income stay up-to-date. I'd suggest working with your accountant to make sure your reports are accurate.

 

You can take a look at this article: Write off bad debt in QuickBooks Desktop. This will give you the step-by-step process of writing off bad debt.

 

Additionally, you can visit the following write-up: Sales and customers. This will provide you links on how to manage your company income as well as resources about other customer-related concerns.

 

I'm only a post away if I can be of additional assistance or need more help with QuickBooks. I'm always here to keep helping. Wishing you a wonderful rest of the week.

gloriadeb204
Level 2

bad debt write off

One last thing -

If we send an account to an attorney for collections, should it be written off?

Does "written off" mean it's done - there's no hope for any collection anymore? 

I ask because the previous bookkeeper did write off debts that we still collect on. The money does not go to the attorney, they send it to us. 

katherinejoyceO
QuickBooks Team

bad debt write off

Thanks for your follow-up questions, @gloriadeb204. When you send an account to an attorney for collections, the collections will try to recover your receivables by sending a notice to the debtors to pay any outstanding balances. 

 

Now, when it has been determined that collection efforts will not result in payment of the amount due, the account will be considered uncollectible or bad debts. 

 

To acknowledge that a loss has occurred, you'll need to record them as bad debt and write them off. This is to ensure your accounts receivables and net income stay updated, and to balance your balance sheet. 

 

For more insights and detailed steps, I'll share the link again suggested by my peer @Rose-AWrite off bad debt in QuickBooks Desktop.

 

I'd suggest you consult an accountant for further guidance in handling debts that the previous bookkeeper write-offs that you're still collecting on. 

 

I've also got you this article will help you learn about the reconciliation workflow in QuickBooks.  

 

Visit again and ask us more questions here in the Community. We're always around here to answer them for you to the best of our knowledge. 

gloriadeb204
Level 2

bad debt write off

Thank you very much

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