Most businesses will, at times, have to write off some invoices as bad debt.\u00a0 While no one likes to do it, at least Peachtree makes it easy.<\/p>\n
Peachtree\u2019s prescribed method, as outlined in the help, is very simple.\u00a0 You just go to the Tasks<\/em> menu and choose Receipts<\/em>.\u00a0 Except for 2 fields, you will enter everything just like you would if you were receiving payment for the invoice.\u00a0 The first difference is the Reference<\/em> field.\u00a0 Since you don\u2019t have a check number, you will need to enter something else.\u00a0 It can be anything up to 20 characters, but something like \u201cBad debt write off\u201d or \u201cW\/O-001\u201d would be typical.\u00a0 The second and most important difference is the Cash Account<\/em> field.\u00a0 You need to change it to your bad debt expense account.\u00a0 This will cause bad debt to be debited instead of cash.\u00a0 If you have turned on the option to hide GL accounts in accounts receivable, you won\u2019t be able to select anything other than an actual cash account in the Cash Account drop down list.\u00a0 In this case, you will need to click on the Journal button at the top of the Receipts window.\u00a0 There you will be able to change the cash account to your bad debt expense account.\u00a0 Check the Pay<\/em> box next to the invoice you are writing off and click the Save<\/em> button.\u00a0 When you click Save<\/em> you may get a warning that says \u201cYou have selected an account type that is not typically used for the Cash account on this transaction.\u00a0 Do you want to save the transaction with this account anyway?\u201d\u00a0 Click Yes<\/em> to save the transaction as you have entered it.<\/p>\n One caution is that the Receipts window remembers the last cash account that you used.\u00a0 So I strongly recommend that when you are done with your write-offs, you either enter a regular receipt, or open an existing receipt and resave it.\u00a0 This will set the cash account back to your regular bank account.<\/p>\n If the invoices you are writing off involve sales tax, and your state allows you to recover sales tax on bad debt, you will want to modify the normal procedure so that it reduces your sales tax liability.\u00a0 You will still write off the invoice through the Receipts<\/em> window.\u00a0 But with this method you do not need to change the cash account.\u00a0 Select the invoice(s) you need to write off, then click on the Apply To Revenues<\/em> tab.\u00a0 Here, enter a description on the first line if you want.\u00a0 Change the GL Account to the Bad Debt account.\u00a0 Set the Tax column to taxable and enter the taxable amount of the invoice (not the invoice total) as a negative in the Amount column.\u00a0 If part of the invoice was non-taxable, enter that amount as a negative on the next line.\u00a0 Set the Tax<\/em> column on this line to exempt and enter account number for Bad Debt Expense in the GL account.\u00a0 Make sure the same sales tax code is entered at the bottom of the receipt as was used on the invoice.\u00a0 Peachtree will calculate the negative tax.\u00a0 The amount on the Apply To Revenues<\/em> tab should now exactly offset the amount on the Apply To Invoices<\/em> tab so that the total amount of the receipt is zero.\u00a0 Click the Save<\/em> button to record the transaction.<\/p>\n","protected":false},"excerpt":{"rendered":" As we approach year end, many people want to clean up uncollectable balances in their accounts receivable. Follow these easy steps for writing off bad debt.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/posts\/426"}],"collection":[{"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/comments?post=426"}],"version-history":[{"count":5,"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/posts\/426\/revisions"}],"predecessor-version":[{"id":622,"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/posts\/426\/revisions\/622"}],"wp:attachment":[{"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/media?parent=426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/categories?post=426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.iqaccountingsolutions.com\/blog\/wp-json\/wp\/v2\/tags?post=426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}