I appreciate you joining this thread, kkbmar. It will affect any prior period accrual basis reports. Since you're on cash basis, those entries were never on your balance sheet or P&L so zeroing them out will not impact any cash basis closed period. Have a great can zero out the invoices if you have access to make changes to prior, closed periods. If you have any further concerns about tracking the transactions, please don't hesitate to post them here. The uncollectible receivable now appears on your Profit and Loss report under the Bad Debts expense account.įor more details about the process, please see this article: Write off Bad Debt in QuickBooks Online.From the Credits section, select the credit memo.From the Outstanding Transactions section, add the invoices.From the + New, select Receive payment.Once done, apply the credit memo to the invoice: In the Message displayed on statement box, enter Bad Debt.On the Amount column, enter the amount you want to write off.
From the Product/Service section, click Bad debts.Choose the customer from the Customer ▼ drop-down.Go to + New and then select Credit memo.Īfter that, create a credit memo for the bad debt: From the Income account ▼ dropdown, choose Bad debts.At the upper right, click New, and then Non-inventory.From the Gear icon, select Products & services.
It isn't a real item, it's just to balance the accounting: Next, if you haven't already, create a non-inventory item as a placeholder for the bad debt.
This process helps keep your accounts receivable and net income accurate. If the invoices you send through QuickBooks are no longer collectible, you can classify them as bad debts and remove them from your records. Writing off old unpaid invoices is easy, Charm25. Forgive me if you know all of this already. That why it's easier to just zero out the invoices IMO. On cash basis, you don't increase revenue, so the Product/Service on the credit memo should match the income accounts associated with the invoices. That's correct for accrual basis but not cash.
If you assign an expense account to the credit memo, your revenue and expense will both increase, thereby offsetting. On cash basis, when you apply a credit memo to an invoice, QB increases your revenue based on the invoice amounts and then offsets that with whatever accounts are assigned to the Product/Services on the credit memo. If you don't have access to make changes, then, IMO, you should create credit memos that offset the revenue on the invoices, not create an offsetting expense. Can zero out the invoices if you have access to make changes to prior, closed periods.