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October 29, 2021
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How to create an allowance for doubtful debts account

  • October 29, 2021
  • 3 replies
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Hello there

 

Could you please let me know how to create Allowance for Doubtful Debt in QBO?  It should be a contra- account under Accounts Receivable.

 

Thanks

SN

Best answer by Rustler

@savita-clearnexu wrote:

Hello there

 

Could you please let me know how to create Allowance for Doubtful Debt in QBO?  It should be a contra- account under Accounts Receivable.

 


Yes it should, and to do that you create an account of the type accounts receivable, set it to be a sub account and name it

3 replies

MichelleBh
October 29, 2021

Help has arrived, @savita-clearnexu.

 

Of course, I'd be happy to provide steps about how to create a contra- account in QuickBooks Online (QBO). This way, you can start tracking them right away. 
 

You'll need to create a chart of accounts (COA) for your allowance for doubtful debt to personalize the data. Follow the steps below: 

 

  1. Go to the Accounting tab on the left side, then choose Chart of Accounts
  2. Click the New button on the right pane. 
  3. In the Account Type drop-down, choose Accounts Receivable.
  4. Select appropriate Detail Type in the field. 
  5. Enter allowance for doubtful debt in the Name box. 
  6. Complete the necessary fields, then hit Save and close

 

For more details, check out this article: Add an account to your chart of accounts in QBO

 

Additionally, I suggest that you consult an accountant. They can help you choose the appropriate account types. 

 

For this transaction, you can create a pending invoice so that if your customer pays, you can receive the payments directly. But if your customer doesn't pay you anymore, you can set up a bad debt account. This way, we can ensure that your accounts receivable and net income are up to date. For additional information, see this link: Write off bad debt in QuickBooks Online.

 

Furthermore, feel free to visit these articles below on how to hide, delete, and add account numbers to personalize them:

 

 

Remember that you can always ask me about any topics or other processes within QuickBooks. Just notify me in this thread, and I'm here to help you again, SN. Keep safe.

October 29, 2021

Why should I create an income account?  Allowance for Bad Debts is a balance sheet item (contra to Accounts Receivable).  

Rustler
RustlerAnswer
October 29, 2021

@savita-clearnexu wrote:

Hello there

 

Could you please let me know how to create Allowance for Doubtful Debt in QBO?  It should be a contra- account under Accounts Receivable.

 


Yes it should, and to do that you create an account of the type accounts receivable, set it to be a sub account and name it

Stoatmonster
July 24, 2023

You could try the suggestions described in this article:

 

Write off bad debt in QuickBooks Online (intuit.com)