Bad debt refers to the amount that a business or firm is unable to recover from a debtor in the event that the borrower has gone bankrupt or is unable to pay the obligation for other reasons. Debt problems can have a significant impact on profit and loss reporting when reconciling accounts in QuickBooks. Bad debt, also known as an uncollectible account, is often associated with account receivables.
This article shall apprise you of the reliable steps to write off bad debt in the QuickBooks Desktop software. So, without wasting any time, let us proceed ahead.
What makes writing off Bad Debt indispensable?
Businesses that frequently sell on credit, such as finance companies, must keep track of a separate bad debt account to write off uncollectible loans. You can clear invoices from account receivables and acquire the exact net profit amount by writing off bad debts in the QuickBooks Desktop software.
Steps to Write Off Bad Debt in QuickBooks Desktop
Follow the steps mentioned in this section to write off bad debt in QuickBooks Desktop. Make sure not to miss out on any point.
Step 1: Add an Expense account for tracing the bad debt
- Initially, proceed to the ‘Lists’ menu and choose ‘Chart of Accounts.’
- Afterward, head to the ‘Account’ menu and choose ‘New.’
- Hit on the ‘Expense’ option and then hit on the ‘Continue’
- After that, input the Account Name, such as Bad Debt.
- Finally, hit a click on ‘Save.’
Step 2: Enclose any Unpaid Invoices
- In the inception, proceed to the ‘Customers’ menu and choose ‘Receive Payments.’
- Then, type the customer’s name in the ‘Received’ section
- Enter ‘$0.00‘ for the payment value.
- Head to the ‘Discounts and Credits’
- Enter the amount you want to add under the ‘Amount of Discount.’
- Then, choose the account you added in the first step for the Discount Account and hit on ‘Done.’
- Finally, hit on the ‘Save’
Winding up..!
We hope that you found this article on writing off bad debt in QuickBooks Desktop useful. The basic goal of removing and writing off bad debts is to overlook any financial imbalances. The procedures outlined above will apprise you on how to research, develop, and maintain bad debt records.
You can contact our experts via live chat or through a phone call if you have any problems setting up bad debt in QuickBooks. Our QuickBooks enterprise technical support team is available 24/7 via our helpline i.e., 1-800-761-1787 to offer indomitable and unmatched assistance.
