Help on Bad Debt

I just revisited the QB Help file. Here's how they suggest recording Bad Debt in QB:

From the Customers menu, choose Receive Payments .

In the Receive Payments window select the name of the customer from whom you incurred the bad debt.

Leave the amount field at 0.00.

In the list of outstanding invoices or statement charges, put a checkmark in front of the line that will not be paid. You'll get the following warning: "You cannot apply an amount greater than the total payment plus any existing credits." Click OK. The checkmark disappears leaving a square box in front of the line that will not be paid.

In the Receive Payments window, click the Set Discount button. In the Discount and Credits window, enter the amount of the bad debt in the Amount of Discount field and the name of your bad debt expense account in the Discount Account field.

Click Done in the Discount and Credits window.

The procedure described above does not affect your sales tax liability.

In the Receive Payments window, save the bad debt transaction.

If necessary, change your sales tax liability

I have tested it and it does work.

Thanks Laura, it worked out perfect.

Lynne

Great news. I also use Peachtree and my original directions are more in line with how I do it with PT. QB handles invoices/credit memos differently than I wish.

Ok. Then where does the reference to receiving $20 from the bankruptcy trustee come from?

-- Stephanie Serba, AICIA Partner, Durham Business Outsource Accounting and Technology

Arno brought that question into the thread. It was not part of Lynne's question. I was also confused until I went back through the messages.

Ok. Mud cleared.

For the record:

Original sale:

Debit A/R 115.00 Credit Revenue 100.00 Credit Tax Payable 15.00

Bad debt:

Debit Bad Debts 100.00 Debit Tax Payable 15.00 Credit A/R 115.00

Partial recovery of Bad Debt: (using original expense account)

Debit Bank 75.00 Credit Bad Debts 65.22 Credit Tax Payable 9.78

Partial recovery of Bad Debt: (using Recovered Bad Debt miscellaneous income account)

Debit Bank 75.00 Credit Rec.BD 65.22 Credit Tax Payable 9.78

Everyone on the same page?

-- Stephanie Serba, AICIA Partner, Durham Business Outsource Accounting and Technology

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Works for me. thanks for writing it up. I hadn't a chance to drag out the accounting book yet to look it up.

Yup, I just used $ 20.00 as an example to alert to the treatment of (partial) recovery of Bad Debt. Arno