Frank R. Knight, C.P.A.

 

 

Bad Debts Preferred Method

 

This method is recommended due to the impact on the sales and sales tax reporting and includes the following steps:

 

1)      Create a bad debt item to use on the credit memo

2)      Enter a credit memo using the bad debt item

3)      Apply the credit against the invoice using the Receive Payments window.

 

Add Item

 

1)      Click the Items & Services icon on the Customers navigator or select Customers: C\Item List from the menu.

2)      Click the Item button.

3)      Select New from the sub-menu.

4)      Click the Type drop-down list and select Other Charge.

5)      Enter Bad Debt as the Item Name/Number.

6)      Select Bad Debt Expense as the Account.

7)      Enter the remaining information in the New Item window.

8)      Click OK.

 

 Issue Credit Memo Item

Enter Credit Memo

1)      Click the Refunds and Credit Memo icon on the Customer navigator or select Customers: Create Credit Memos/Refunds from the menu.

2)      Click the Customers: Job drop-down list and select the appropriate customer or job.

3)      Use the item called Bad Debt as a line item.

4)      Enter the amount of the bad debt to write off as the Amount.

5)      Click in the Tax column of the bad debt line item if the original line item was taxable.

6)      Enter the remaining information in the Create Credit Memos/Refunds window.

7)      Click Save & Close

 

Apply Credits

Apply Credit Memos

 

1)      Click the Receive Payments icon on the Customer navigator or select Customers: Receive Payments from the menu.

2)      Click the Customers: Job drop-down list and select the appropriate customer or job.

3)      Click the Apply Existing Credits button

4)      Click Save & Close