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Writing off a Bad Debt in QuickBooks QBi
ID: 376 Category: Accounts - Business Range - Desktop & Hosted (previously QuickBooks) Status: Resolved Views: 4412


Question:
How do I write off a Bad Debt in QuickBooks QBi?

Solution:

Follow the steps outlined below to account for a Bad Debt in QuickBooks:



  1. Open your Chart of Accounts by going through your Lists Menu or pressing CTRL + A on your keyboard

  2. From your Chart of Accounts, choose New. Set up a Bad Debts account with the account type Expense

  3. Set up a Service item which will be linked to this Bad Debt account. To create the Item:
     a. Go through the Lists menu and select Item List, click the Item button and select New
     b. Give the item a name e.g. Bad Debts, leave the Rate field as 0.00, donít select a Tax Code
     c. Select the Bad Debts account you created and click OK

    Assuming there is an Invoice currently outstanding and awaiting settlement

  4. From the Customers Menu choose Create Adjustment Notes/Refunds

  5. Select the correct Customer and choose the Bad Debts item, enter the amount of the bad debt and select the relevant Tax Code
     Note: The tax code you select for the Bad Debts item on the Adjustment Note/Refund must match what's on the original invoice; this is to ensure your BAS is correct

  6. Click Save & Close

  7. When prompted, select Retain As An Available Credit and click OK
    The Customer will now have a credit waiting to be applied to the outstanding invoice.

  8. From the Customers Menu, choose Receive Payments

  9. Select the Customer in the Received From field

  10. Select the outstanding Invoice and click the Credits button, select the Bad Debts Adjustment Note youíve created and click Done. You will be returned to the Receive Payments window

  11. Ensure the Adjustment Note has been applied to the Invoice correctly and click Save & Close

You have now accounted for the Bad Debt in QuickBooks. To check that it has gone through you can open a Profit & Loss report or a Tax Summary report.



Related Issues:
No related issue is available.

Submitted: 3/27/2009 Modified: 3/27/2009


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