Business owners prefer to record a bad debt expense for maintaining track of it. Certain business owners put QuickBooks to use when this expense has to be recorded. In this accounting software, Chart of Accounts is used the most for adding an account and then recording the bad debt expense in it. This way is suitable for recording this expense in both QBO and QuickBooks Desktop.
For implementing the Chart of Accounts for entering bad debt expenses in QB, the details can be found in this blog. We have shown how to record a bad debt expense in QuickBooks Online and QBDT with every important step included in the process.
This blog’s outline is as follows:
In QuickBooks, to record a bad debt expense, you can directly move to Company. Here, you can make use of the Chart of Accounts to pick Account. For adding an account, the New option needs to be selected. Following this, use Expense when you are asked to mention the type of the account. Now, you can hit the Continue button. After this, the user will have to specify the Account Number only when the same is applicable. Then the customer can be chosen for whom the bad debt expense needs to be added.
Note: In the above-mentioned step, an account number will be added only when it is applicable.
Note: In this step, the customer needs to be selected from the list given.
As you perform the final step, the window of the transaction will be turned off. Also, the bad debt expense will get successfully recorded.
For the users of QBO, a bad debt expense can be recorded only when outstanding receivable for an account is known. This receivable can be known by running the report for Accounts Receivable Aging Detail via QuickBooks Online’s Reports menu. After knowing it, you can use the Settings of the software to make an account for recording the expense. Next to making the account, you will have to prepare an item for bad debt and add it to your account. You may choose to prepare a credit memo to keep a note of this expense. Thus, for the expense, you will be able to record the bad debt in QuickBooks Online.
This is how you can create an account to record the expense for bad debt as well as add a credit memo for it.
Bad debt or the expense for it can be added to QuickBooks by running the Chart of Accounts. COA is available in the Lists option. After this, you can choose Account and press New in it. You will find Expense on the display. Choose it and then tap on the Continue option. Now, you need to assign a name to the account being created. Once you have named it, open Customers and use Receive Payments. Then fill in the fields like Received from and Payment Amount. This is how you can learn how to record a bad debt in QuickBooks Desktop for an expense.
Tip: You may use “Bad Debt” as the name for the account.
This blog explained the details of recording expenses for bad debts in QuickBooks and its various versions. On following the steps in order, your account for bad debt will be made and the expenses will be added to it. For additional guidance, you can connect with us through our comment box.
To continue reading such blogs, check out how to record a security deposit refund in QuickBooks. You can also look at how to record deposits in QuickBooks Online.