Simple Procedure to Write Off Debt in QuickBooks Desktop

The term bad debt infers the amount that a company or organization is unable to collect from a debtor who has declared bankruptcy or is otherwise unable to fulfill their financial obligation. When reconciling accounts in QuickBooks, bad debt issues can significantly impact profit and loss reporting. Accounts receivable, also known as bad debt or uncollectible accounts, are often associated with this. In this post, you will learn the precise procedures for writing off bad debt in the QuickBooks Desktop program.

Write Off Bad Debts in QuickBooks Desktop Screenshot

Why is it important to write Off Bad Debt in QuickBooks?

In businesses that commonly sell on credit, such as banks, it is important to maintain a separate bad debt account to write off uncollectible debts. By writing off bad debts in QuickBooks Desktop, users can remove the invoices from accounts receivable and accurately calculate the net profit amount. This is extremely important for businesses as any the presence of Bad Debt could lead to issues in the financial statements.

Steps to Write off Bad Debt in QuickBooks Desktop

To write off bad debt in QuickBooks Desktop, follow the step-wise instructions outlined below:

Step 1: Add an Expense Account to Track Bad Debt

In the beginning, head to the Lists menu and then choose Chart of Accounts.
After that, click on the Account tab and the hit on New.
Click on Expense and then hit on Continue.
Enter the account name, such as "Bad Debt."
Finally, click on the Save button.

Step 2: Clear Unpaid Invoices

In the beginning, head to the Customers tab.
Herein, click on the option to Receive Payments.
Enter the client's name in the Received area.
Enter "$0.00" as the payment amount.
Select Discounts and Credits from the menu.
Enter the desired amount under Amount of Discount.
Choose the account you added for the Discount Account in the previous step and click Done.
Finally, select the Save button.

Final Words!

We hope this article has been helpful in understanding the process of writing off bad debt in QuickBooks. Writing off bad debts is important for maintaining financial accuracy. If you encounter any issues while writing off bad debt in QuickBooks, don't hesitate to reach out to our QuickBooks desktop error support professional at 1-800-761-1787.