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drstewart512
April 3, 2024
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If I account for a bad debt and the debt is eventually aid, how do I account for this?

  • April 3, 2024
  • 1 reply
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Best answer by Rainflurry

@drstewart512 

 

There are a number of ways this can be handled.  Personally, I like to create a sales receipt and under 'Category', select the same bad debt item you used on the credit memo.  That deposits the payment into the account selected under 'Deposit to' and reverses the bad debt expense as of the sales receipt date while also recording it under the customer profile. 

 

If the bad debt expense credit memo that was created and applied to the previously uncollectable invoice was in 2024, you can delete it and then receive payment on the now-open invoice.  If you close your books each month or the credit memo was from 2023 or earlier, then go with the sales receipt option.   

1 reply

Rainflurry
Rainflurry
April 3, 2024

@drstewart512 

 

It depends on how you "accounted" for the bad debt?  Did you create a credit memo for a bad debit expense item and apply it to the invoice or ???  Just to confirm, you only have bad debit expense if you're on accrual basis.  Cash basis does not have bad debt expense.  Forgive me if you know that - the level of accounting knowledge on this forum varies widely.  

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drstewart512Author
April 3, 2024

Than you for your prompt response!, Yes, I use the accrual method. I did a credit memo to record the bad debt from an invoice.  Eventually, the invoice was paid. How do I address this on QBO?

Rainflurry
RainflurryAnswer
April 3, 2024

@drstewart512 

 

There are a number of ways this can be handled.  Personally, I like to create a sales receipt and under 'Category', select the same bad debt item you used on the credit memo.  That deposits the payment into the account selected under 'Deposit to' and reverses the bad debt expense as of the sales receipt date while also recording it under the customer profile. 

 

If the bad debt expense credit memo that was created and applied to the previously uncollectable invoice was in 2024, you can delete it and then receive payment on the now-open invoice.  If you close your books each month or the credit memo was from 2023 or earlier, then go with the sales receipt option.   

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