Bad Debts correct on P&L, but show as income on reports

Hello there, 

Let me share a possible reason why the bad debt shows as an income in the monthly sales report. 

It's possible that the box to Also update this account in historical transactions was unchecked when you changed the account.



You can toggle the account by returning to the item information page. Here's how:

1. On the Income account field, select any income account.
2. Once done, click Save and close.
3. Go back to the Bad debt information page then choose the correct expense account.
4. Tick the box on the Also update this account to historical transaction.
5. Once ready, select Save and close.

For detailed information, kindly visit: Write off bad debt in QuickBooks Online.

I'll also include this article you can use if you want to learn how to get the most of your financial reports: Customize reports in QuickBooks Online.

Should you need further assistance with recording bad debts in QuickBooks Online (QBO), feel free to leave a reply. The Community team is here anytime. Have a great day!

Thank you for your reply. I do not have that option to select, perhaps because I already had that Bad Debts product from last year. To be clear, when reports include expenses, the amount if correct. My need is for accuracy on my product specific reports which don't include the expense of the Bad Debt. Another time I wish I could customize reports more thoroughly. Any other ideas?

@change default tax rate 

My need is for accuracy on my product specific reports which don't include the expense of the Bad Debt.

If you date the credit memo for the bad debt expense the same day as the invoice, it should show on sales reports for the same month.  Or, you can add a bad debt expense service item to the invoice as a negative amount to zero out the invoice.  Either way, the sale and its associated bad debt expense should show on your sales reports.  If the sale happened in November, for example, but you date the credit memo in December, the sale will show on November reports and the credit memo will show on December reports.  From an accounting perspective, the sale happened, so it's going to show on reports short of deleting the customer's invoice, which you really don't want to do depending on what is on the invoice.