Skip to main content
J
Jbear1212
June 18, 2021
Question

Bad Debt invoices on Cash Basis QBDT 2019 Premier

  • June 18, 2021
  • 1 reply
  • 0 views

Our president has decided to not pursue a client for 2 open invoices dating back to 2017. We are on a cash basis. One invoice never had a payment applied to it and the 2nd invoice has a $500.00 balance with a partial payment applied to it in Dec 2017. Since we're on a cash basis, I'm not finding clear answers on how to deal with both, especially the partially paid invoice with an open $500 balance. My thought was to void the invoice w/no payment applied, attaching a copy of the invoice before voiding. However, the 2nd one w/a partial open balance is a pickle for me. Thank you in advance for assistance!

 

1 reply

C
Catherine_B
June 18, 2021

Hello there, Jbear1212.

 

Allow me to show you how we handle them in QuickBooks.

 

When invoices you send in QuickBooks Desktop become uncollectible, you need to record them as a bad debt and write them off. You can do this process though you're in an accrual or cash basis accounting method. This ensures that your account receivables and income are up-to-date. 


We'll have to create an expense account to track the bad debt if you haven't yet.

  1. Go to the Lists menu and select Chart of Accounts.
  2. Select the Account menu and then New.
  3. Click Expense, then Continue.
  4. Enter an Account Name, for example, Bad Debt.
  5. Select Save and Close.

If you already have an expense account to track bad debts, you can proceed to closing out the unpaid invoices. Here's how:

 

  1. From the Customers menu and select Receive Payments.
  2. Select the customer. 
  3. Enter a zero amount in the Payment amount field. 
  4. Select Discounts and credits.
  5. In the Amount of Discount field, enter the amount you'd like to write off.
  6. For Discount Account, select the bad debt expense account and select Done.
  7. Select Save and Close.

Feel free to use this link on how to record common customer transactions in QuickBooks Desktop. 

 

I'll be here if you have other questions in handling your sales transactions in QuickBooks. I'll be here to help. Have a good one!

J
Jbear1212Author
June 18, 2021

First, I want to confirm that this is the proper accounting for a Cash Basis system.

 

Second, I opened a Customer Payment window, selected the customer, left the Payment Amount as $0.00, but Discounts and Credits is greyed out in this window. Is this something that needs to be edited in the "Preferences" section? Or how would I access this since it's not available in this window.

 

Thank you!

MichelleBh
MichelleBh
June 18, 2021

Thanks for the update and for giving it a try, @Jbear1212.

 

I have here other steps to ensure you can apply a discount to your bad debt invoices in QuickBooks Desktop. 

 

The Discount and Credit button will be greyed out if there are no unpaid invoices for that customer. See the sample screenshot below for your reference. 

 

Since the Discount and Credit button is greyed out even though the customer has a bad debt transaction, you'll want to create a discount item as another option. Then add it on the bad debt invoice as a negative amount. Let me show you how. 

 

  1. Go to the Lists menu, then choose Item List. 
  2. Click Item drop-down and pick New. 
  3. Select Discount in the Type box. 
  4. Type an Item Name in the field. 
  5. Pick the Expense account you've previously created in the Account drop-down. 
  6. Click OK. 
  7. Go back to the Customer Center, then click the old invoice and add the discount item in the second line. 
  8. Make sure the amount is negative, then tap Save and Close. 

 

Once done, you can go to your Chart of Accounts to review the discount you've previously entered. Simply click Ctrl + A and look at the expense account you created. 

 

Additionally, you can always run any customer reports to track all the transactions and personal information entered into the system. Then customize it to show specific details. For the complete steps, visit this page: Understand reports.

 

Lastly, check out these pages to learn how to create a credit memo/ refund in QuickBooks and other related matters. 

 

 

Drop a comment below if you have more questions about your bad debt invoices. I'm here whenever you need more help. Keep safe. 

Terms & ConditionsAccessibility statement