"Bad debt" refers to the amount that cannot be collected from a debtor due to the bankruptcy or insolvency of the latter. Perform the below-given steps to write off bad debt in QuickBooks desktop or negative inventory in QuickBooks Desktop. Abide by the steps in the same order as they have been mentioned in this blog.
Step 1: Create a bad Debt Account
- From the Lists menu, select Chart of Accounts.
- Then, after going to Account, choose New.
- After choosing an expenditure, click the Next tab.
- Next enter the account's descriptive name, such as "Bad Debt."
- To finish, select "Save" from the file menu.
Step 2: Check for Outstanding Invoices
- The initial step requires opting for “Accept Payments” option accessible in the “Customers”
- After that, type in the client's name.
- The subsequent step is to type "$0.00" into the "Amount"
- After that, select “Payment” Options, followed by choosing “Discounts Credits”.
- Type the sum into the “Amount of Discount"
- Then, choose the account created earlier and hit the “Finish”
- Finally, select the “Save” option
