How to Apply Allowance for Bad Debt to Accounts Receivable in Quickbooks
As you do business, you can expect some of your vendors or customers to default on outstanding invoices. When this happens and you cannot collect on it, you write off the bad debt. In QuickBooks, you can do this through the doubtful accounts allowance. QuickBooks allows you to record the bad debt allowance as it occurs. If you manage your accounting records in QuickBooks on your own, you can apply the bad debt allowance yourself.
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Instructions
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Launch QuickBooks, if you have not already done so, and go to the “Customers” menu. From there, click on “Create Credit Memos/Refunds.”
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Select the customer with the bad debt by using the drop-down arrow in the field labeled “Customer:Job.”
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Click the drop-down arrow in the field labeled “Item” and select “Doubtful Account Write-Off” from the available options.
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Type in the amount of the bad debt you want to write off in the field labeled “Amount.” Click “Save and Close,” which opens the “Available Credit” screen.
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Click “Apply to an invoice” and then “OK” to proceed. When the open invoices screen appears, click on the related invoices and click “Done.” This fully applies the bad debt allowance.
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