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gloriadeb204
Level 3

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 April 09, 2021

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!

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14 Comments 14
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!

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 3

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 3

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 3

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 3

bad debt write off

Thank you very much

MarcelleW
Level 1

bad debt write off

I followed steps 1-2 but in Step 3, I do not see "Discounts and Credits" button anywhere on the screen

Candice C
QuickBooks Team

bad debt write off

Good afternoon, @MercelleW. 

 

Thanks for chiming in on this thread. Allow me to point you in the right direction to get this fixed. 

 

Since you're unable to find the "Discounts and Credits" button, I suggest contacting our Customer Support Team for further assistance. They'll be able to walk you through the steps with a screen share tool. Here's how: 

 

  1. Go to the Help menu. 
  2. Press the QuickBooks Desktop Help option. 
  3. Tap the Contact Us hyperlink. 
  4. Give a brief description of the problem and click Let's talk
  5. Scroll down and choose to Get a callback.

 

It's that easy! 

 

Keep us updated on how the call goes. I'm only a post away if you need me. Take care! 

JudyC61
Level 1

bad debt write off

I have followed the instructions, which indicates no dollar entry on the "receive payments" dialog box. In the "discounts and credit" box, I enter the amount to write off, and immediately met with another dialog box that says "warning - the discount amount cannot be more than the Amt. To Pay".  Now what? The customer in question has 2 dozen invoices for the total I need to write off. Am I to do this exercise 24 times?

ChristieAnn
QuickBooks Team

bad debt write off

Hi there, JudyC61.

 

Thank you for visiting the QuickBooks Community. I'll provide some details you'll be able to sort the error message you received. Then, ensure that you can write off transactions.

 

When choosing invoices to be paid on the Receive Payments screen and the total of all invoices exceeds the figure in the Payment amount field, you'll get the message that indicates "You cannot apply an amount greater than the total payments plus any existing credits when creating a payment in QuickBooks".

 

To start with and to fix the issue, I recommend applying a discount or credit to one or more invoices. 

 

Here's how:

 

  1. Choose the invoice line without checking it (highlight the invoice by clicking the date or number field).
  2. Select the Discount and Credits button. Then, to apply a discount:
    1. Click the Discount tab.(Optional) Change the amount of the discount.
    2. Note: QuickBooks calculates a suggested discount amount based on your payment terms with the customer and the payment date. You can enter any discount amount you choose; you don't have to use the suggested amount. However, the amount of the discount can't be higher than the original invoice.
    3. Enter the name of the expense account you use to track discounts. (Example: Discount Expense).
    4. Click Done to record the discount.
  3. To apply for a credit:
    1. Click the Credits tab.
    2. Put a checkmark on the credit you want to apply.
    3. If you do not want to use the entire credit or if the credit amount is more than the customer balance, change the amount under the Amt to Use column.
    4. Click Done to record the credit.
  4. Select the Save & Close button.

 

If the issue persists, you can change which invoices are selected to be paid. You can open this article to see the steps on how to perform the process and follow solution two: Warning: You cannot apply an amount greater than the total payments plus any existing credits.

 

Lastly, you may open this article to view different ways on how you can track customer transactions in QuickBooks Desktop: Get started with customer transaction workflows in QuickBooks Desktop.

 

Let me know if you still have questions or concerns about achieving a write-off in QuickBooks. I'll be around for you. Take care and have a good one.

mgonzalez86
Level 1

bad debt write off

Hi, 

if the discount option is not available, is there any other way to clear the items on bad debt account ? if so what are the steps on QB online. 

 

 

 

 

thank you 

MirriamM
Moderator

bad debt write off

Good to see you on the thread, @mgonzalez86.

 

The discount option to write off bad debt provided above is for QuickBooks Desktop (QBDT). Allow me to give you some insight on how to clear the items on a bad debt account in QuickBooks Online (QBO). 

 

When the invoices you send to your customers become uncollectible, you need to record them as a bad debt and write them off. This ensures your accounts receivable and net income stay up to date. 

 

To do this, you'll need first to create an expense account. Here's how:

  1. Click the Gear ⚙ icon at the top.
  2. Select Chart of Accounts.
  3. In the upper right, select New.
  4. Choose Expenses for the Account Type.
  5. For the Detail Type ▼ drop-down, choose Bad debts.
  6. Enter Bad debts in the Name field.
  7. Select Save and Close.

 

Second, create a bad debt item:

  1. Click the Gear ⚙ icon at the top.
  2. Select Products and Services.
  3. Click New.
  4. Choose Non-inventory.
  5. In the Name field, enter Bad debts.
  6. From the Income account ▼ drop-down, select Bad debts.
  7. Select Save and Close.

 

Third, create a credit memo for the bad debt.:

  1. In the left menu, click the + New button.
  2. Select Credit Memo.
  3. Enter the client name on the Customer ▼ drop-down.
  4. Select Bad debts in the Product/Service section.
  5. Add the amount you want to write off.
  6. (Optional) enter Bad Debt in the Message displayed on statement box.
  7. Select Save and Close.

 

Lastly, apply the credit memo to the invoice:

  1. In the left menu, click the + New button.
  2. Select Receive Payment.
  3. Choose the appropriate customer in the Customer ▼ drop-down, .
  4. From the Outstanding Transactions section, select the invoice you want to write off.
  5. From the Credits section, select the credit memo.
  6. Select Save and Close.

 

After that, the uncollectible receivable now appears on your Profit and Loss report under the Bad Debts expense account.

 

To learn more about recording uncollectible accounts in QBO, see this article: Write off bad debt in QuickBooks Online. It also contains information on how you can run a bad debts report.

 

For future help, if you need to check your sales report and see your cash flow from your customers, I recommend checking out the articles from our Sales reports topic page. 

 

Feel free to visit the Community with any other questions you may have. Or if you run into any trouble along the way. I’m more than happy to assist further. Wishing your business continued success.

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