QuickBooks: Recording a Bad Debt

Unfortunately every company has to write-off an uncollectable accounts receivable balance at one time or another.  When you must record this bad debt transaction in QuickBooks, follow these simple instructions:

1. Go to the Customers menu and click Receive Payments.

2. Select the name of the customer from whom you incurred the bad debt.

3. Leave the amount field at 0.00.

4. Put a checkmark in front of the line item that will not be paid.  If QuickBooks populates an amount in the Payment field, override with $0.  (This item will appear on the Discount tab of the Discounts and Credits Window.)

If your Sales & Customers preferences are set to automatically calculate payments, the amount this customer owes will be filled in for you as soon as you enter the checkmark.  Dismiss the message about the payment preference and enter 0.00 in the Amount field again.

5. When you click Discount & Credits, you will see this window:

6. Enter the amount of the bad debt in the Amount of Discount field and confirm/adjust the Discount Account (should be to Bad Debt Expense.)

7. Click ‘Done’ in the Discount and Credits window.  Note: This procedure does not effect your sales tax liability.

8. In the Receive Payments window, save the bad debt transaction.

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