where should bad debt show up in P&L report

Hello there, PromisedLand.

Proper tracking of transactions is vital when running a business, including uncollectible amounts. This helps keep you on top of your financial records. Let's work together so you can see the bad debt expense in the Profit and Loss statement. 

The bad debt reserve or bad debt allowance is recorded on the Balance Sheet. While the Profit and Loss report reflects the relevant amount of bad debt expense. 

The accounting method and date used can impact the data displayed on your reports in QuickBooks Online (QBO). It paints a different picture depending on the method or date range you select. You'll have to set the correct information in the report to show the bad debt expense.

Here's how:

1. Open the Profit and Loss report, click the Report period drop-down, and select the correct date range.
2. In the Accounting method section, choose Cash or Accrual.
3. Tap the Run report button to view the changes. 
   
   

This reference provides insights into how each accounting basis works: Choose between cash and accrual accounting methods in QuickBooks Online.

Aside from that, check the account used for the bad debt. Make sure that you've selected the correct  Account Type and Detail Type.

You can also use the Customize function to focus on the details that matter the most to you. For specific ways to refine your reports and which one to run, the following resources outline the complete steps to carry out the task:

• Run reports in QuickBooks Online
• Common custom reports in QuickBooks Online
  
  

If you need further assistance navigating QBO or have additional questions about financial statements and bad debts, leave a comment below and tag my name. I'm more than happy to respond to them. Have a good one, PromisedLand.

@PromisedLand 

"After applying credit memos to unpaid invoices, the bad debt showed up as negative 'Service Income Revenue' which is the top level revenue category."

You must have a 'Service Income Revenue' selected as your income account on your bad debt item.  You need to select your Bad Debt Expense account under 'Income account' on the non-inventory product set up.  See Step 3, #4 from the link you sent.

My Bad Debt expense is still showing up in a cash basis P&L Report. Since it's not a cash expense, shouldn't it be excluded on the report?

@userkyle 

Unfortunately, QB isn't that smart.  Bad debt only applies to accrual basis accounting and QB cannot remove both the invoice and related bad debt expense when switching between cash and accrual basis reports. If bad debt is on your P&L, then you're using the accrual process to clear the uncollectible invoice.  If you're on cash basis, you can use a credit memo that hits the same revenue accounts as the original invoice or zero out the original invoice.  If you use both cash and accrual basis for internal reporting, then the credit memo is a better option IMO.  

I am having the same problem as the OP. I have selected Bad Debt Expense under the Income Account on the non-inventory product set up, but it still is not showing up on accrual P&L.  However, my menu does not give me the option to  Select the I sell this product/service to my customers checkbox.  So wondering if something is outdated in directions?

Thanks for getting involved with this thread, MDC94.

The steps in our Write off bad debt article are up-to-date. If you're not seeing your I sell this product/service to my customers checkbox in Step 3: Create a bad debt item, I'd recommend troubleshooting the browser you're using.

It could have something to do with temporary internet files. Browsers store these types of files, but sometimes they can cause issues on certain webpages.

There's a few troubleshooting processes you can perform.

Here's how:

1. Try using a private or incognito browser.
2. Restart your browser.
3. Clear the browser's cache.
4. Add Intuit as a trusted site.

In the event it continues not displaying your I sell this product/service to my customers option, you'll want to confirm you meet each of our system requirements for using the platform.

If you've performed each of the troubleshooting steps above, but still notice issues, you'll want to get in touch with our Customer Care team. They'll be able to pull up your account in a secure environment, conduct further research with you, and create an investigation ticket if necessary.

I'll be here to help if there's any additional questions. Have a wonderful Tuesday!