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.