Writing Off Short Payments or Bad Debt

“Quicklet” - A Podcast for QuickBooks Pro, Premier, Enterprise Solutions & Point of Sale users featuring helpful information, tips, tricks and suggestions for bookkeepers, business owners, and consultants. Got a QuickBooks Mess? Ask The QuickBooks Gal!
Ask the QuickBooksGal!
Hi, I'm Jayne Miller, The QuickBooks Gal. Welcome to another in our series of “Quicklets” – informational podcasts about QuickBooks and related bookkeeping topics.

The other day a client called to ask me how she could write off some small short payments on customer accounts. Additionally, she had a couple of account that she wanted to write off to bad debt at the end of 2007. That is really simple if you use the Credits & Discounts button inside the window where you apply payments on accounts.

Here's how to do this:

1 - Open up the Receive Payments window and bring up the customer account you wish to affect. Then, date the transaction for the end of the accounting period you wish to affect. Note: I do this so I can easily find any adjustments I make...I always date my adjustments the last day of the month/year that they affect.

2 - Make sure that you do not enter an amount in the Amount section.

3 - Attempt to place a check mark next to the invoice in the ledger portion of the window that you wish to adjust. You will get an error message telling you that you don't have an amount designated...just tell the message OK. Note: in QuickBooks 2008, once you click on the invoice, the amount automatically fills in above. If this happens, blank out the amount window.

4 - Press the Discounts & Credits button in the lower portion of the window to bring up another window where you can select the amount to discount and the account to which you wish to assign the "write-of" amount.

5 - Enter the amount you wish to write off and then select the account. I use Customer Discounts when a customer underpays an invoice an I have chosen to write it off....generally I write off anything under $5.00. If you are writing off an noncollectable debt, then use Bad Debt Expense as your category.

Of course, you can always use a General Journal entry to accomplish this, however this method not only is simpler, it also reconciles the open balance on the invoice(s) you are writing off.

I hope you find this useful. If you need help or have questions, send me an email at jayne@quickbooksgal.com.

Last week, I did a podcast about the new I-9 forms that replaced the old forms on December 26, 2007. I hope you are all using those. Today, a lady came into my office looking for those forms...someone told her that she should come here for them. If you are looking for the new form, visit my blog for a link where you can download the form and the instructions or check out my podcast at blog.quickbooksgal.com.

I would like to remind everyone to back up. We're wrapping up 2007 bookkeeping and processing lots of end of year documents such as W-2, 1099, and Quarterly & Annual reports. Let's make sure we are backing up and protecting our work! If you are using an older version of QuickBooks (1999-2005) it's time to think about upgrading to QuickBooks 2008. This is especially important if you are processing Payroll or accepting Credit Cards through QuickBooks. Check out the money saving offers on my blog or visit quickbooksgal.com to shop in our online store.

Well, that’s it for now. I appreciate your time and hope you will join us again next time for another in our Quicklet© series. If there are topics you would like me to cover, send me an email at jayne@quickbooksgal.com. I welcome your ideas, questions, and comments.

Got a QuickBooks Mess? Call The QuickBooks Gal!

I’m Jayne Miller, The QuickBooks Gal. Thanks for listening.

Jayne Miller, is the owner of Custom Business Solutions, is a consulting firm in Reno, NV that specializes in providing bookkeeping and software support. © 2007


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