Income account and Bad Debt

cebmiller1313 · ‎September 08, 2021

I don't even know any more. Great start right.

I have an A/R account that all of my invoice payments are dumping into; at the same time I have a bad debt A/R

sub-account that all of my invoice payments are showing up in. (I did not set it up - the accountant that did is useless. Claims he doesn't know how it happened. I am trying to fix it.)

All of my products and services are under an income account called sales. QBO obviously says I can't change that.

I thought about changing the "type" of the BD A/R account to like a current assets account.

I just wanted it to stop dumping into that BD account. Let me know what I didn't explain well.

Thanks, sorry.

Rea_M · ‎September 09, 2021

Thanks for the further clarification, @cebmiller1313. I'll make sure you're able to keep your accounts updated and manage income transactions in QuickBooks Online (QBO) accordingly.

QBO will initially use one default A/R account for your invoices. But, once there are multiple A/R types of accounts, the default will sometimes allocate incorrectly. This is why there are some sales that were assigned on the wrong accounts (i.e., BD A/R).

To resolve this matter, I'd recommend deleting and recreating the invoices that are incorrectly assigned to the BD A/R sub-account. Then, inactivate the BD A/R sub-account so the system allocates all your sales transactions to the appropriate A/R account (default).

You can delete the invoices by following these steps:

Go to the Accounting menu.
Select Chart of accounts.
Find the BD A/R sub-account and select View register under the Action column.
Choose the invoice transaction to open its details.
Click More below and choose the Delete option.
Select Yes to confirm. Repeat as necessary.

Once you're done, inactivate the BD A/R sub-account. You can refer to this article for the detailed steps: Make an account inactive on your chart of accounts in QuickBooks Online.

Then, you're set to recreate your invoices. In case you haven't recorded the details of the deleted invoices, you can use the Audit Log to recover the information you need and re-enter them appropriately.

Also, the accounts in your Chart of Accounts are used to categorize your transactions on everything from sales forms to reports to tax forms. To understand your chart of accounts more, I'd recommend checking out this article: Learn about the chart of accounts in QuickBooks. It includes topics about accounts that QuickBooks sets up for you and how you can manage them accordingly.

Let me know in the comments below how it goes. If you have other concerns about managing A/R accounts and sales transactions in QBO, I'll be right here to help. Keep safe always, @cebmiller1313.

View solution in original post

ReymondO · ‎September 08, 2021

Good day, @cebmiller1313.

QuickBooks Online allows you to create multiple A/R accounts. However, the program will only use the initial A/R account as default in tracking A/R balances.

Moreover, the system won't allow you to change the bad debt A/R sub-account to another detail type. Although, you can make this account inactive. This essentially deletes it. QuickBooks hides inactive accounts from lists and menus but keeps past transactions on your reports.

Here's how:

Go to Settings ⚙ and select Chart of accounts.
Find the account you want to delete.
Click the Action ▼ drop-down list and select Make inactive.

When you run reports, you’ll still see inactive accounts and their transactions. QuickBooks includes them to keep everything accurate. You can customize some reports to hide them.

Should you have any follow-up questions or concerns, don't hesitate to post again here in the Community or leave a comment on this thread. Take care and have a good one.

cebmiller1313 · ‎September 09, 2021

Thanks I appreciate the help.

I should also probably clarify:

We just have a normal subscription not the pro or anything fancy.

The payments for the customers going into the bad debt bucket aren't bad debt. I have customers who are paying early enough to even take a discount. Everything is going there.

The BD accounts on our chart of accounts were created for a single we no longer do business with but still has an outstanding balance. There is nothing happening with this customer. Its just there for now.

So dumb follow up question:

1. If my initial A/R account was set up Jan 14, 2021 and the the BD A/R sub- account wasn't set up until Feb 02, why is the program using the BD A/R then?

2. Am I going to screw up the whole company, if I follow those steps below.

Thanks again,

Rea_M · ‎September 09, 2021

Thanks for the further clarification, @cebmiller1313. I'll make sure you're able to keep your accounts updated and manage income transactions in QuickBooks Online (QBO) accordingly.

QBO will initially use one default A/R account for your invoices. But, once there are multiple A/R types of accounts, the default will sometimes allocate incorrectly. This is why there are some sales that were assigned on the wrong accounts (i.e., BD A/R).

To resolve this matter, I'd recommend deleting and recreating the invoices that are incorrectly assigned to the BD A/R sub-account. Then, inactivate the BD A/R sub-account so the system allocates all your sales transactions to the appropriate A/R account (default).

You can delete the invoices by following these steps:

Go to the Accounting menu.
Select Chart of accounts.
Find the BD A/R sub-account and select View register under the Action column.
Choose the invoice transaction to open its details.
Click More below and choose the Delete option.
Select Yes to confirm. Repeat as necessary.

Once you're done, inactivate the BD A/R sub-account. You can refer to this article for the detailed steps: Make an account inactive on your chart of accounts in QuickBooks Online.

Then, you're set to recreate your invoices. In case you haven't recorded the details of the deleted invoices, you can use the Audit Log to recover the information you need and re-enter them appropriately.

Also, the accounts in your Chart of Accounts are used to categorize your transactions on everything from sales forms to reports to tax forms. To understand your chart of accounts more, I'd recommend checking out this article: Learn about the chart of accounts in QuickBooks. It includes topics about accounts that QuickBooks sets up for you and how you can manage them accordingly.

Let me know in the comments below how it goes. If you have other concerns about managing A/R accounts and sales transactions in QBO, I'll be right here to help. Keep safe always, @cebmiller1313.

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Income account and Bad Debt