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How to record Settlement check with commission deducted

I received a settlement check from a 3rd party. Do I recored the settlement amount of $5k (agreed amount) or the check amount of $3k against the clients outstanding balance. The rest of the balance will then be written off as bad debt. What is the correct way to close out the clients books.

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Best answer April 14, 2020

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Moderator

How to record Settlement check with commission deducted

I know a way on how we can get through in this situation, BonnieDE.

 

First, we have to record the exact amount you've received from your client and apply it to the invoice.

  1. Open the affected invoice and click Receive payment.
  2. Enter the payment date and where to deposit the amount.
  3. Mark the invoice and enter the exact amount you've received ($3k).
  4. Click Save and close.

The invoice will remain open since it was only paid partially. The remaining amount would be our bad debt. Now, to write off the bad debt, here are the things that we need to do:

  1. Create a bad debt expense account
  2. Create a bad debt item
  3. Create a credit memo for the bad debt
  4. Apply the credit memo to the affected invoice

For the detailed steps, you can use this link for reference: Write off bad debt in QuickBooks Online.

 

Please let us know if you need further assistance in following the steps. We'll be right here.

View solution in original post

1 Comment
Highlighted
Moderator

How to record Settlement check with commission deducted

I know a way on how we can get through in this situation, BonnieDE.

 

First, we have to record the exact amount you've received from your client and apply it to the invoice.

  1. Open the affected invoice and click Receive payment.
  2. Enter the payment date and where to deposit the amount.
  3. Mark the invoice and enter the exact amount you've received ($3k).
  4. Click Save and close.

The invoice will remain open since it was only paid partially. The remaining amount would be our bad debt. Now, to write off the bad debt, here are the things that we need to do:

  1. Create a bad debt expense account
  2. Create a bad debt item
  3. Create a credit memo for the bad debt
  4. Apply the credit memo to the affected invoice

For the detailed steps, you can use this link for reference: Write off bad debt in QuickBooks Online.

 

Please let us know if you need further assistance in following the steps. We'll be right here.

View solution in original post

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