The term bad debt infers the amount that a company or organization is unable to collect from a debtor who has declared bankruptcy or is otherwise unable to fulfill their financial obligation. When reconciling accounts in QuickBooks, bad debt issues can significantly impact profit and loss reporting. Accounts receivable, also known as bad debt or uncollectible accounts, are often associated with this. In this post, you will learn the precise procedures for writing off bad debt in the QuickBooks Desktop program.
Why is it important to write Off Bad Debt in QuickBooks?
In businesses that commonly sell on credit, such as banks, it is important to maintain a separate bad debt account to write off uncollectible debts. By writing off bad debts in QuickBooks Desktop, users can remove the invoices from accounts receivable and accurately calculate the net profit amount. This is extremely important for businesses as any the presence of Bad Debt could lead to issues in the financial statements.
Steps to Write off Bad Debt in QuickBooks Desktop
To write off bad debt in QuickBooks Desktop, follow the step-wise instructions outlined below:
Step 1: Add an Expense Account to Track Bad Debt
Step 2: Clear Unpaid Invoices
