How to Write Off Bad Debt in QuickBooks?
To know how to write off Bad Debt in QuickBooks, follow the instructions given below.
You can perform this process in four steps:
- Create an account with Bad Debt Expense.
- Create an item for the Bad Debt.
- Create a credit memo.
- Apply the created credit memo to the invoice.
Steps: Create an account on Bad Debt Expense
- Launch the QuickBooks on your system.
- Go to the Chart of account section.
- Locate the Employee Advances option and right-click it.
- Select the New option. Click the Radio button beside the Expense option in the Choose one account type section.
- After selecting the account type, click the Continue button.
- Now the window will appear on the screen. Here, you to have type the account name and the details related to the account.
- Type the Bad Debt expense keyword in the Account Name text field.
- After entering the account name and other details, click the Save & Close button available at the bottom of the screen.
- Now, an account is created successfully for Bad Debt Expense.
Steps: Create an item for the Bad Debt
- Go to the main screen of the QuickBooks application.
- Tap the Items & Services option.
- Right-click on the Unbillable Time option and select New.
- Now the Item List window will open.
- Select the Other Charge option from the drop-down menu next to Use for miscellaneous labor, materials, or part charges such as setup free service charges and delivery charges.
- Type the Bad Debt command in the Item NameNumber and Description fields.
- Leave the Amount or % field blank.
- Choose the Bad Debt Expense option from the Account drop-down menu.
- Now the Bad Debt Item is created. Click the OK button.
Create a Credit Memo & Apply the Created Credit Memo to the Invoice
- Tap the Customer Center option. Select the customer who is not going to pay you.
- Click Reports Customers & Receivables A/R Aging Summary.
- In the A/R Aging Summary, you can find the customers to whom you own money.
- Now, right-click on the customer name and select the Create Credit Memo option.
- On the credit memo screen, select the Bad Debt option from the Item drop-down screen.
- Enter the amount to be paid in the RATE text field.
- After entering the required information, click the Save & Close button.
- Now a pop-message What would you like to do with this credit ? will appear on the screen.
- Click the Radio button beside the Apply to an invoice option.
- Now the Apply Credit to Invoice dialog box will appear on the screen.
- Checkmark the invoices from the displayed list and click the Done button.
- For, more info related write off Bad Debt in QuickBooks contact our experts.