Accounts Reconciliation Blog

Learn how to write off bad debt using accounting software. From the receive payments window, choose the invoice to be written off then click on discount. From the discount window, enter the amount to be written off and select “bad debt expense” as the account. However, these write-offs of accounts payable will not adjust the liability included for sales tax on the invoice. It will also not reduce the sales reported on your sales by item reports.

If you want a more comprehensive method, use a credit memo. You may need to set up a new item called “bad debt write-off taxable” which includes:

~Item type = other charge
~Account = bad debt expense
~Tax code = tax