Bad debt write-offs?


#1

How do you set up and create a bad debt write off? It isn’t a debt obviously. However, if it’s created as a credit it will show up in the reports as income. A business needs to keep track of the bad debt write-offs. So, need to know how it’s supposed to be done in here.


#2

Steve,

The way we do it for Sonar is to have an adjustment debit called ‘Bad Debt.’ When a customer doesn’t pay their bill, we add an adjustment to cover the difference using the ‘Bad Debt’ adjustment, which zeroes out the account. We then subtract any debits with the ‘Bad Debt’ service from our revenue when we do our monthly accounting.


#3

Maybe I’m misunderstanding, but should there be an adjustment credit instead of a debit so the account balance will be zeroed out? Or do you use a negative number for the debit?

Example: Customer owes $1.00 and we’re writing it off. We pull up the customer’s billing tab, go to transactions, then hit “adjustment.” I select my “bad debt” debit for the service and enter 1.00 in the amount. I submit and now the customer shows as owing $2.00.


#4

Yes, it should be a credit.


#5

Are you trying to say I’m not crazy? :slight_smile:


#6

I wouldn’t dream of questioning your sanity!