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Need to clear out balance, send to bad debt and clear A/R.

Forum|Forum|7 years ago
December 11, 2018
3 replies
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I've got a client who will not be paying. I have a balance of 256.07. I was told to send it to bad debt and clear out A/R. I'm seeing about a million steps on how to do this. Can someone help me? I'm using qb premier contractor edition 2016. I went to receive payments and put in 256.07 as a credit/discount and used the account bad debt. Is that all I need to do?

QuickBooks Desktop

Best answer by Rustler

@ suzette

The article reference by the intuit rep, sort of work, but bypasses reporting - I suggest you do not use it

create a non inventory item named bad debt, and select a bad debt expense account on the non inventory item screen (create the bad debt expense account first if you need to)

create a credit memo for the customer, use that bad debt item, enter the amount, save

in receive payments, select the customer, the invoice and apply the credit memo, save

RustlerAnswer

Level 15

@ suzette

The article reference by the intuit rep, sort of work, but bypasses reporting - I suggest you do not use it

create a non inventory item named bad debt, and select a bad debt expense account on the non inventory item screen (create the bad debt expense account first if you need to)

create a credit memo for the customer, use that bad debt item, enter the amount, save

in receive payments, select the customer, the invoice and apply the credit memo, save

J

jkvz

Hi,

I recorded a bad debt by making a bad debt expense account and also made it in the item list. Then, I created a credit memo for the customer for that amount. The line item, bad debt expense, showed up on my P&L, but it did not deduct it from the bottom line profit--why is that?

JessT

Moderator

Hi jkvz,

Instead of creating a credit memo, you can pay the invoice and set a discount posted to your bad dept account. You can check out the article for recording bad dept and follow the second set of steps.

Please get back to us if you have other questions.

JessT

Moderator

Hi Suzette.Horner,

I hate recording bad debts, but this is what happens when customers can’t pay anymore.

Thanks for taking the time to search for it in the Community. The steps you’ve tried were correct. That should clear the Accounts Receivable.

We have an official article for recording Bad Debts in QuickBooks Desktop. You may want to check it out.

Please get back to me if you have other questions.

qbteachmt

Level 11

"I went to receive payments and put in 256.07 as a credit/discount and used the account bad debt. Is that all I need to do?"

I have an attached image that shows you why this is Not a good method to use. You just created Out of Balance reporting.

You create an Other Charge Type item linked to the account you want to track the Write Off against. The Tax forms call this "Returns/Allowances" and it is in the Income part of the tax form. This is called Contra-Accounting.

Use that item on a Credit memo for the customer name, and apply this to the Open balance, to close out that amounts.

"create a credit memo for the customer, use that bad debt item, enter the amount, save

in receive payments, select the customer, the invoice and apply the credit memo, save"

The Apply to Open Charges is right at the top of the Credit Memo; there is an icon already there. You don't need to go to Receive Payments, as well.

S

suzeta20Author

Thank you so much!

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