Write Off Old Uncollectible Invoices From time to time, it becomes necessary to write off a customer balance that has become uncollectable. Let’s look at how to record this transaction in QuickBooks. Add a new Item for Bad Debts. Open the Item list, click the Item button in the lower left corner, and select New.
Select ‘Other Charge’ as the item type. Name the item ‘Bad Debt’. Do not enter a default amount. Make the item taxable and in the Account field, select the expense account for Bad Debt Expense.
In every case where you are not sure about getting money back from the customer, you should write off the bad debt. For such cases, the invoice is considered. In this video, it shows you how to write off bad debt within QuickBooks. Come visit us on Facebook, like the page to get up to date with the latest tricks I should add that using a Credit Memo also create discrepancies between the sales/revenue figures reported on your Quickbooks Profit/Loss statement.
If you don’t already have an expense account for this purpose, you can create one without leaving item setup. Issue a Credit Memo.
Choose the Refunds and Credits icon from the Home Page or select Create Credit Memos/Refunds from the Customer drop-down menu. Enter the customer, date, etc.
In the header of the credit memo. Use the bad debt item just created as the line item in the credit memo. Enter the amount to be written off exclusive of any sales tax amounts. Enter the appropriate Sales Tax Code. Use a non-taxable code if there is no sales tax to be written off. If applicable, select the appropriate Sales Tax Item from the drop down list at the bottom of the Credit Memo form. Click Save and Close.
See the screenshot below. Apply the Credit Memo Choose the selection to Apply to an invoice when this popup appears. Be sure the correct invoice, if there is more than one, is selected in this window, and click Done. Hector Garcia, CPA Certified Advanced QuickBooks ProAdvisor 12401 Orange Drive #136 Davie, FL 33330.