When you sell any goods on credit to the customer. But you didn’t get money from the customer within the accounting period. Then this is often by default called bad debts in accounting. Due to there no chance to receive money from the customer. So today we’ll mention, the way to write off bad debts in QuickBooks. So let’s see below first what’s bad debts.
What is Bad debt?
When your company sells anything on credit, then the corporate records it in its accounting books as account receivable. And this account receivable is very chance to didn’t get money from the customer. By the way, this account receivable comes under current assets. So it’s necessary to stay a record of it while creating a record.
Overall bad debts are a term once you sell goods on credit, but the customer didn’t pay the quantity that he has got to pay to you. It’s referred to as bad debts for the corporate or uncollectible expenses. So let’s see the way to record bed debt in QuickBooks below…
How To Write Off debt In QuickBooks?
By following the below-mentioned steps you’ll easily write on Bad Debts in QuickBooks.
However different accounting software features a different approach to record debt. But the concept of bad deb is analogous altogether places. But if you’re using QuickBooks then let’s see the way to write off bad debts in QuickBooks.
Step 1: Add An travel and entertainment account to trace the debt
- Now first, attend the chart of account
- And make a replacement account by wright click on Account> New
- Choose travel and entertainment account from the Choose account type window.
- And this travel and entertainment account after a while we’ll mad as debt.
- Click on the create button, Now you’ve got to specify Account Name as debt
- Now click on the reserve it setup
- Then you would like to line up a nasty debt item for invoicing and link it thereto debt expense accounts
- Now attend the List menu and choose the list item and make a replacement item by right click on the below
- The first tab then clicks on New.
- Then click on Other charges from the menu
- A provides a reputation as debt write off and click on the OK button
- Now you’ve got to seek out a customer that has an invoice to write down off.
- Click on the Customer tab and choose a customer from the list of customer
Then you’ll see the Transaction list of that specific customer. Suppose there may be a transaction of $5000 and if we’ve to write down of it. Then let’s see the way to write on debt in QuickBooks.
- So let’s create a credit memo for that customer
- By clicking on the New transaction dropdown menu then click on Credit Memo
- Once you attempt to enter detail, a warning popup window appears. You’ve got to click on the checkbox and click on the OK button
- Type debt write off and enter the quantity as we’ve supposed her $500
- This credit memo helps you to scale back tax payment.
- Now click on Save, and it’ll show you a few options. So if we select Apply to an invoice, and click on on the
- OK button.
- Then we’ll see Apply credit to invoice, and choose your transaction as we’ve $5000 and click on the Done button.
Congrats, you’ve got learned the way to write off debt in QuickBooks. But its a long process. So we bring her shortcut method for you.
Short Cut Method Of write on bed debt in QuickBooks
As you’ve got seen above method of write on bed debt employing a credit memo. But the above method is extremely long and confusing. So we’ve sort trick to write down of debt in QuickBooks. Let’s see below.
- Attend New Transaction Tab and click on Receive Payment
- And choose a specific customer that you simply need to make a nasty debt
- Click on Discount and Credit
- And enter the quantity within the amount field
- Now choose debt from the Discount account dropdown menu and click on on the OK button.
This method is best for those people that don’t charge sales taxes.
As you’ve got seen above the way to write off debts in QuickBooks Desktop. Also, we’ve described what’s debt in accounting. So follow the above steps, as consistent with the use of employing a credit memo is that the best to approach to write down off debt in QuickBooks. due to its cleaner and lot more traceable. If you’re still unable to write down then you’ll contact QuickBooks ProAdvisor.