Procedure for Writing off Negative Balances (Bad Debt) in QuickBooks Desktop

"Bad debt" refers to the amount that cannot be collected from a debtor due to the bankruptcy or insolvency of the latter. Debt can majorly impact a company's income even though QuickBooks allows for account reconciliation. Accounts receivable are often linked to bad debts or uncollectable accounts and getting the bad debt written off is extremely crucial. This article shall lay an entire focus on the “procedure to write off bad debt in QuickBooks desktop”.

What is the Need to Write off Bad Debt?

Writing off bad debt is extremely important. Due to the prevalence of sales on credit, financial institutions must monitor the eminence of bad debts. Writing off bad debts in QuickBooks Desktop will help the accountant to obtain an accurate net profit by deleting invoices from account receivables.

Walkthrough to write off Bad Debt in QuickBooks Desktop

Perform the below-given steps for writing off the bad dept/ negative inventory in QuickBooks Desktop. Abide by the steps in the same order as they have been mentioned in this blog.

Step 1: Create a bad Debt Account

• From the Lists menu, select Chart of Accounts.
• Then, after going to Account, choose New.
• After choosing an expenditure, click the Next tab.
• Next enter the account's descriptive name, such as "Bad Debt."
• To finish, select "Save" from the file menu.

Step 2: Check for Outstanding Invoices

• The initial step requires opting for “Accept Payments” option accessible in the “Customers”
• After that, type in the client's name.
• The subsequent step is to type "$0.00" into the "Amount"
• After that, select “Payment” Options, followed by choosing “Discounts & Credits”.
• Type the sum into the “Amount of Discount"
• Then, choose the account created earlier and hit the “Finish”
• Finally, select the “Save” option

This blog aimed at providing a viable procedure to help users in the “process to write off bad debt” or “fix negative inventory issue in QuickBooks Desktop”. For more help, you can directly call our QuickBooks experts at 1-800-761-1787.