How to write off bad debt in QuickBooks?

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      Before writing bad debts you must know the reason behind it. When an invoice comes in a large amount and is uncollectible, then you need to record a bad debt and write it off. Begore writing bad debt make sure that your accounts receivable and net income are up to date.

      Step 1- check your aging accounts receivable

      Review other invoices and receivables that must be considered as bad debt using the accounts receivable aging detail report.

      • Go to the reports menu.
      • Go to the find report by name filed and enter “accounts receivable aging detail”.
      • Verify which outstanding accounts receivable should be written off.

      Step 2: Create a bad debts expense account

      • Click on the gear icon under your company and select a chart of accounts.
      • Select new from the upper right corner.
      • Go to the account type drop-down and select the expenses.
      • Go to the detail type drop-down and select the bad debts.
      • Enter the bad debts in the name field.
      • Select save and close.

      Step 3: Create a bad debt item

      • Click on the gear icon under lists and select products and services.
      • Select new at the upper right and then the known inventory.
      • Enter the bad debts in the name field.
      • Go to the detail type drop-down and select the bad debts
      • Select save and close.

      Step 4: Create a credit memo for the bad debt

      • Click on the create icon.
      • Under the customers click on the credit memo.
      • Under the customer drop down click o the appropriate customer.
      • Go to the product and service section and select the bad debts.
      • Go to the amount column and enter the amount you want to write off.
      • Go to the message displayed on the statement box and enter bad debt.
      • Select save and close.

      Step 5: Apply the credit memo to the invoice

      • Click on the create icon.
      • Go to customers and select the received payment.
      • Go to the customer dropdown and select the appropriate customer.
      • Go o the outstanding transactions section and select the invoice.
      • Select save and close.

      The uncollectible receivable will appears on your Profit and Loss report.

      Step 6: Run a bad debts report

      You can run an Account QuickReport to verify all the receivables you tagged as bad debt. To do this:

      • Click on the Gear icon.
      • Go to Your Company and select Chart of Accounts.
      • Go to the Action column of the bad debts account, select Run report.
      Answered 6 days ago.
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