There are a couple of ways to write off bad debt (if you are on an accrual basis). This is what I do.
First, be sure you have recorded all attempts to collect the money, including your notes and any correspondence to the debtor.
- Create a Bad Debt expense account in the
chart of account if you don't already have one.
- Create a non-inventory item in the Products
and Services list called Bad Debt and select the bad debt expense account on
the item screen.
- Create a credit memo for that customer, using the bad debt item, enter the amount and save.
- In receive payments, apply the CM to the
invoice, save.
