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4000Hwy273
Level 1

reporting a loss

We invoiced a customer for work done and they have refused to pay. The invoice has been voided but how do we report this as a loss?

10 Comments 10
Anonymous
Not applicable

reporting a loss

If you void then invoice then thats it - whatever expenses you incurred are already recorded and that is your cost (loss)

The (preferred) alternate is to leave the invoice alive and then create an offsetting credit to Bad Debts.

Rustler
Level 15

reporting a loss


@Anonymous wrote:

If you void then invoice then thats it - whatever expenses you incurred are already recorded and that is your cost (loss)

The (preferred) alternate is to leave the invoice alive and then create an offsetting credit to Bad Debts.


True, unless inventory items were on the invoice, in that case voiding the invoice returns them to stock.

Carolexx
Level 4

reporting a loss

I'm on QB Enterprise Desktop, can you give me the steps for this...do I start at outstanding open invoices and receive payment but mark it as loss?  How do I do this as I have several outstanding invoices that were not paid when our company started and I'd like to charge them off to loss but do not know the procedure.

Carneil_C
QuickBooks Team

reporting a loss

Thank you for chiming in on this thread and sharing your concerns, @Carolexx

 

I'd be happy to walk you through the process of marking unpaid invoices as loss in QuickBooks Desktop.

 

Since you have those uncollectible invoices, we can write them off as bad debt. This ensures that your accounts receivable and net income stay up to date.  

 

First, we’ll add an expense account to track those bad debts. I’ll show you how: 

 

  1. From the Lists menu, select Chart of Accounts.
  2. Select the Account menu and then click New.
  3. Click Expense and then tick Continue.
  4. Enter an Account Name, for example, Bad Debt.
  5. Then Save and Close when done. 

 

From there, we can now close out those unpaid invoices. Here’s how: 

 

  1. Go to the Customers menu and choose Receive Payments.
  2. Enter the name of the customer in the Received from field.
  3. Enter $0.00 in the Payment amount
  4. Choose Discounts and credits.
  5. From the Amount of Discount field, enter the amount you'd like to write off.
  6. For Discount Account, choose the account you added, and select Done.
  7. Click Save and Close.

 

Repeat the same process for the rest of the unpaid invoices. I've added this guide for more insights: Write off bad debt in QuickBooks Desktop.

 

You can also look at this article that’ll help you pull up reports to manage your customer’s open balances: 

 

 

Ping me a reply if you have further clarification about achieving a write-off in QBDT. I’m more than happy to help. Take care always. 

cakauz
Level 1

reporting a loss

I want to keep the loss and move it to the next calendar year.  We are expecting to receive income in the coming year.  We do not want to close the program.

Lynzann0318
Level 1

reporting a loss

Hello. 

How do I do these steps for the online QB version? I tried to follow the instructions, but it doesn't go through the same screens.

 

Thanks. 

Lynz

JamesAndrewM
QuickBooks Team

reporting a loss

Welcome to the Community, @Lynzann0318.

 

Let me provide you with the steps on how to write off invoice balances.

 

To start, let's create an expense account and create bad items that will serve as a placeholder for the unpaid invoices.

 

Next, we'll make a credit memo and apply it to the invoice. Here's how:

 

  1. Go to the + New button.
  2. Click Credit memo.
  3. Select the customer from the Customer ▼ dropdown.
  4. In the Product/Service section, select Bad debts.
  5. Under the Amount column, enter the amount you want to write off.
  6. And in the Message displayed on the statement box, enter “Bad Debt.”
  7. Select Save and Close.

 

These are the steps to apply the credit memo to the invoice:

 

  1. Go to + New.
  2. Under Customers, select Receive payment.
  3. From the Customer ▼ dropdown, select the appropriate customer.
  4. Under the Outstanding Transactions section, select the invoice.
  5. From the Credits section, select the credit memo.
  6. Select Save and Close.

 

You may visit this article as your reference when you reconcile an account to ensure your accounts in QBO are balanced: Reconcile an account in QuickBooks Online.

 

If you have any further concerns about your transactions, don't hesitate to post them here. Have a great day!

magicleicecream
Level 2

reporting a loss

Hi guys, 


Hope you are having an awesome day. Thank you for all the support you give to this awesome QB community. Even though I always browse and find answers to my questions, I believe this is my first time posting questions, so here it goes:

QUESTION/CONCERN #1
I'm currently using QBO and the steps above I guess are for desktop. I found the steps for QBO that you posted below. However, I have not been able to proceed beyond step #4 as "Bad Debt" is not a product or service, it is an expense account not available to be selected under "Products or Services" on the credit memo. Here are your steps:

  1. Go to the + New button.
  2. Click Credit memo.
  3. Select the customer from the Customer ▼ dropdown.
  4. In the Product/Service section, select Bad debts.


Due to "Bad Debts" not being a "Product/Service" QBO is not giving me the option to choose "Bad Debts" on step #4. What can I do?

QUESTION #2. 

We're an ice cream truck business and have inventory, but do not track inventory. We account for inventory left at the end of the fiscal year and the start of the new fiscal year. Anything in between we do not track. However, we had a major loss of US$7,201.96 in product inventory due to a power shortage. How can I report this as a loss in QBO? What are the steps to report it as a loss in Quickbooks Online?  Thank you so much in advance for all your help. 

Sidney 

JanbonN
QuickBooks Team

reporting a loss

Hello there, @magicleicecream. We appreciate your positive feedback towards the Community. Allow me to share some insights about your questions.

 

For your first question, you need to create a non-inventory item and name it Bad Debt. Here's how to do it:

 

  1. Go to the Gear icon and choose Product and services.
  2. Click New, and select Non-inventory.
  3. Use Bad Debt as the name.
  4. Fill in the necessary details and make sure to choose Bad Debt in the Income account dropdown.
  5. Click Save and close.

 

Then continue with the steps stated above as a guide.

 

For your second question, you'll need to create an expense account to track the amount you lose for the inventory item. Here's how to do it:

 

  1. Go to the Gear icon and choose Chart of accounts.
  2. Click New and select Expenses.
  3. Choose the account in the Save account under dropdown. I recommend referring to your accountant on which account you need to choose. 
  4. Fill in the necessary details.
  5. Click Save.

 

Then, proceed to create a service item to link the expense account.

 

  1. Go to the Gear icon and choose Product and services.
  2. Click New, and select Service.
  3. Choose a name.
  4. Fill in the necessary details and make sure to choose the expense account we created above in the Income account dropdown.
  5. Click Save and close.

 

Additionally, you can run an inventory report to get a summary of your products.

 

Comment on this thread if you encounter any problems while using the program. The Community is available 24/7 to assist you. Have a great day ahead. 

Rainflurry
Level 12

reporting a loss

@magicleicecream 

 

Sorry to hear about the loss.  How do you record the purchase of ice cream?  If you expense it at the time of purchase, then that is your expense (loss) and there's nothing additional to record.  If you capitalize it (record it as inventory) then you need to make a journal entry to reduce inventory and book the loss since you never expensed the cost of the ice cream.  But, since you mentioned you don't track inventory, I assume that's not the case.  The bottom line is that you only expense the cost of the ice cream once - either when you purchased it or when you need to remove it from inventory and expense it with a journal entry/inventory adjustment.    

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