Client Cancels Event, Forfeits Payment With Sales Tax

Hello there, TSPLLC.

For the customer's money, you can't collect, you can record it as a bad debt and write them off. First, you'll have to create a Bad Debt expense account. If you haven't created one, you can use these steps: 

1. Go to the Lists menu and click Chart of Accounts.
2. At the bottom, click Account and select New.
3. Click Expense and then Continue.
4. Enter a name something like Bad Debt.
5. Click Save and Close.

Then let's close out the unpaid invoice. Here's how: 

1. Click Customers and select Customer Center.
2. Look for the customer and double-click on the invoice.
3. Click Receive Payments from the Invoice window.
4. Under the PAYMENT AMOUNT field, enter a $0.00. 
5. Click Discounts and Credits.
6. From the Discount tab, enter the amount to write off or the remaining amount on the invoice.
7. Select the bad debt account you just created under the Discount Account.
8. Click Done and then Save & Close.

For the paid sales tax, I'd suggest reaching out to an accountant on how you'll record the adjustment. For more details, you can see the process sales tax adjustment link.

You can also run reports that will help you get an overview of your account balances: Customize reports in QuickBooks Desktop.

Feel free to leave a reply below if you need more help. Take care!

Good to hear back from you, TSPLLC.

Thanks for the clarification. You can apply a journal entry credit to the open invoice to zero out its balance instead of recording a bad debt. Let me show you how: 

1. Click Company from the menu and select Make General Journal Entries. 
2. Enter the affecting account on the first line and enter the balance amount on the Debit column.
3. Select Accounts Receivable on the second line and enter the balance on the Credit field.
4. The totals should be equal and then Save & Close.
5. From the Customers menu, click Receive Payments.
6. Select the customer's name and select the open invoice.
7. click Discounts And Credits. 
8. Select the journal entry you just created. 
9. Click Done then Save & Close.

The customer's invoice balance is now zeroed out. You can use the Run Reports in QuickBooks Desktop article to get an overview of your customer transactions. 

I'd highly recommend reaching out to an accountant so they can help you identify the correct accounts affecting the journal entry. 

Let me know if you have other concerns. I'm just around the corner to help. Have a good one!

Hi TSPLLC!

Allow me to join this thread so I can share some details about the unpaid invoice.

Journal entry may sometimes tricky so it's best to seek help from your accountant. They can guide you on the proper accounts to use with this method especially since this will affect your income and taxes.

Also, you can make a sales tax adjustment. This is applicable if you want to decrease the sales tax liability. For the detailed steps, here's how to process sales tax adjustment in QuickBooks Desktop.

Need more help? Keep your posts coming and we'll respond as soon as we can.