Recording warranty time and expenses in QBO

Hello there, @gthydraulic.

I know just what to do to help you code the warranty time or expense so it will show in QBO as a loss. You'll have to write it off as a bad debt to clear the invoice out of your accounts receivable and reduce your net profit.

First, create a weekly timesheet to bill the job performed:

1. Click the Plus icon.
2. Choose Weekly Timesheet.
3. Enter the necessary information.
4. Click Save.
   

Second, create an invoice for the billable expense:

1. Click the Plus icon.
2. Choose Invoice.
3. Enter the customer name.
4. On the left side of the screen, select the billable transactions.
5. Click Save.
   

Third, you have to create an account for bad debts:

1. On the top menu, click the Gear icon.
2. Choose Chart of Accounts.
3. Click New.
4. On the Account Type drop-down list, select Expenses.
5. From the Detail Type drop-down list, select Bad Debts.
6. In the Name field, enter Bad Debt.
7. Select Save and close.

Fourth, create a product/service item for the bad debt:

1. On the top menu, click the Gear icon.
2. Choose Products and Services.
3. Click New.
4. In the Product/Service information panel, select Non-inventory.
5. In the Name field, enter Bad Debt.
6. In the Income account field, select the Bad Debt expense account you created.
7. Clear the Is taxable checkbox.
8. Select Save and close.

Fifth, create a credit memo for the debt:

1. Click the Plus icon.
2. Select the customer from the Customer drop-down list.
3. In the Product/Service field, select the Bad Debt item you created.
4. Enter the Amount of the unpaid invoices as a positive number.
5. Select Save and close.
   

Lastly, receive the payment to apply the credit memo:

1. Click the Plus icon.
2. Choose Receive Payment.
3. Select the customer from the Customer drop-down list.
4. In the Outstanding Transactions section, select the invoices to write off.
5. Under Credits, select the credit memo you created. Make sure the Amount received is 0.00.
6. Select Save and close.
   

After, you can run a report to make sure that the amount is posted on the correct account. For in-depth information and detailed steps, you can refer to this link: How to write off bad debt.

I also recommend seeking an accountant for an expert's advice to ensure there will be no problem with the books in the future.

Keep me posted on how these steps work out for you. I'll be here to keep helping if you have follow-up questions. Just mention my name or click the Green (reply) button. Have a wonderful day ahead.

If you are not going to bill the customer on the warranty time then just Set up Warranty as a customer.

Set up a payroll acct item for Warranty. The hours paid to the warranty payroll item is where you can select the customer it goes to. Then you will not have to create an invoice and bad debt. it will just be an expense or Cost of goods however you have it set up. Or just make the warranty item non billable or set up warranty item in sales for 0 dollars that way a zero dollar  invoice will be created for the customer and you can see the warranty call that was done and expense the labor cost. If you do many warranty calls you can set up a Warranty Reserve Account on the balance sheet. You can take a percentage of sales every month and make a monthly journal entry for example. Service call sales for the month of February were $10,000.00. Figure what percent of call backs you are doing say it is 2%. Make a journal entry every month for 2%b of total revenue Reduce revenue sales by $2000.00 and take to warranty account on balance sheet.Then you can reduce the amount on balance sheet when you run the warranty call without the customer getting invoiced.This will keep your gross margin with labor correct.