Great video; Thanks. Question: How do you handle VAT in such a situation? I am putting a journal entry to reverse the taxation. Is that o.k., or is there an easier way?
@@RazorAccounting VAT is value-added tax, like HST, QST, PST or GST in Canada. I am in Canada as well, and I used VAT instead of the specific value-added tax. Please let me know if this answers your question.
Easy to follow, however I ended up with a negative open balance. FYI The invoice was partially paid some time ago, but customer took a deduction I did not authorize and refused to pay. It is this deduction I wrote off and received the negative open balance. Do u have a video instruction on how to correct? Thank you
My QB system is on a cash basis , not accrual. How do I write off a year old invoice? Can I simply void it? or apply a credit memo towards it? Or something else? I’d really appreciate your help. Thx
@@michaelslavin766 To remove the invoice from accounts receivable you can use the method in the video or post an entry in the general ledger. In the general ledger the first line item will be a credit to accounts receivable for the invoice amount, use the drop down in the name column to select the customer, the next line will be a debit to bad debt expense.
@@RazorAccounting thank you. I’ll do that. I thought since it is a cash based accounting system that bad debt doesn’t apply since I didn’t pay any taxes whatsoever. I was wrong
Great question! When you write off a sale the sales tax is reversed back out of the books same way as the sale/revenue is. So if you already sent in your sales tax payment for that period you would get a credit towards your next sales tax period/payment.
I am assuming you are referring to GST. In this case I would suggest posting the transaction in the general journal as a credit to accounts receivable, a debit to GST payable, and a debit to bad debt expense. This way you will recover the GST previously filed. Make sure the accounts receivable account is the first line item in the transaction or you will not be able to post the entry. You will also need to use the drop down to select the customer name in the name column to remove the amount from accounts receivable. Let me know if you have any other questions.
That’s a great question. You reverse the entry therefore you receive a credit in your system for sales tax already remitted. This will reduce the sales tax you have to remit in your next reporting period.
@@RazorAccounting I am on desktop. Out of the 6 invoices I tried to write off, 4 had the both the discount & credit tabs and 2 only had a credit tab. I cant figure out why.
@@RazorAccounting Thanks for the response, I really appreciate it. Well in any case a receivable that is written off could be reestablished if the delinquent decides to pay. So I'd so no (mmm not really), not quite sure how i should respond to your question
@@budomushin if you want to create an allowance for doubtful accounts entry do that in the general journal. Do yo have the appropriate GL accounts set up?
@@RazorAccounting Yes I believe so. I guess my issue is that I'd like the AFDA to be displayed as a contra asset below the A/R, reducing it to A/R NRV. So for that to be the case it would have to be of type A/R, but I don't think QuickBooks allows you to have more than 2
@@budomushin Unfortunately in QB we don’t seem to have the ability to control the placement of the accounts in the balance sheet. For presentation purposes I would recommend exporting the Balance Sheet into excel then re arranging the accounts as required for your purposes.
My QB system is on a cash basis , not accrual How do I write off a year old open invoice? Since it’s cash basis, can I simply void it?- or write a credit memo applied to it? Or something else. Thanks. I hate to mess with old established invoices!!
Hi Michael, I don’t really understand how you can be using a cash basis and still have an amount in accounts receivable. Cash basis would not record accounts receivable at all. Can you explain how you do this so I have give you a better answer? Thanks
@@RazorAccounting you actually answered my original question already. For some reason the question was printed twice. In any event, for clarification : I have a partially paid invoice from mid 2021 which is now deemed to be uncollectible in full. I’d like to write off the rest. The amount remaining is in accounts receivable and I am on cash basis accounting, QuickBooks desktop 2020 pro. The real question I had was how to write it off. Since I know that bad debt doesn’t apply to cash based accounting (I won’t be paying income tax on the remainder), then why use a bad debt account? Sorry for the confusion. Thx again
If the tax return has not been filed yet for the 2021 tax year you can adjust the invoice to match the amount the customer has paid. However, if the tax return is filed you cannot change anything in that period and in that case you would report a bad debt in the current tax year to remove the amount from accounts receivable and balance out reported income with a bad debt expense in the current tax year.
It is so inconvenient that you can't write off multiple invoices at the same time. Frustrating when you want to write off the uncollectable finance charges that have accrued over time, and might have 20-40 lines with automatic monthly finance charges.
Thank u. I will give it a shot this evening!
Very helpful. Thanks!
Excellent video. Easy to understand the instructions
Thank you very much!
Very Helpful, easy to follow steps. Thank you
thank you ☺
Very helpful! Thank you for making this video!
I’m happy to help. Thank you for your comment.
Great video; Thanks. Question: How do you handle VAT in such a situation? I am putting a journal entry to reverse the taxation. Is that o.k., or is there an easier way?
Hi there, can you explain VAT? I’m practicing in Canada, I’m not sure if I can assist with this.
@@RazorAccounting VAT is value-added tax, like HST, QST, PST or GST in Canada. I am in Canada as well, and I used VAT instead of the specific value-added tax. Please let me know if this answers your question.
Thank you!!
Easy to follow, however I ended up with a negative open balance. FYI The invoice was partially paid some time ago, but customer took a deduction I did not authorize and refused to pay. It is this deduction I wrote off and received the negative open balance. Do u have a video instruction on how to correct? Thank you
Let me know if this helps you. If not you can email me directly aimee@razoraccounting.com th-cam.com/video/wnXWRia20lE/w-d-xo.htmlsi=AtsXUcWpIuS11Evu
I ended up doing it a bit differently but thanks!
My QB system is on a cash basis , not accrual.
How do I write off a year old invoice?
Can I simply void it? or apply a credit memo towards it? Or something else?
I’d really appreciate your help. Thx
Hi Michael, is the amount sitting in accounts receivable? how are you tracking your unpaid invoices?
@@RazorAccounting yes. I track it periodically through the reports. It’s not a large business so it’s not hard to keep track of what’s going on
@@michaelslavin766 To remove the invoice from accounts receivable you can use the method in the video or post an entry in the general ledger. In the general ledger the first line item will be a credit to accounts receivable for the invoice amount, use the drop down in the name column to select the customer, the next line will be a debit to bad debt expense.
@@RazorAccounting thank you. I’ll do that. I thought since it is a cash based accounting system that bad debt doesn’t apply since I didn’t pay any taxes whatsoever. I was wrong
Great video! I am wondering what happens if the invoice being written off includes sales tax.
Great question! When you write off a sale the sales tax is reversed back out of the books same way as the sale/revenue is. So if you already sent in your sales tax payment for that period you would get a credit towards your next sales tax period/payment.
I am assuming you are referring to GST. In this case I would suggest posting the transaction in the general journal as a credit to accounts receivable, a debit to GST payable, and a debit to bad debt expense. This way you will recover the GST previously filed. Make sure the accounts receivable account is the first line item in the transaction or you will not be able to post the entry. You will also need to use the drop down to select the customer name in the name column to remove the amount from accounts receivable. Let me know if you have any other questions.
That’s a great question. You reverse the entry therefore you receive a credit in your system for sales tax already remitted. This will reduce the sales tax you have to remit in your next reporting period.
What could be the reason why I only have a credit tab, no discount tab in my invoice that I am trying to write off?
It could be a different version of QuickBooks. What version are you using?
@@RazorAccounting I am on desktop. Out of the 6 invoices I tried to write off, 4 had the both the discount & credit tabs and 2 only had a credit tab. I cant figure out why.
Is there a way in quickbooks desktop to book bad debt using the allowance method? I really would like to see my A/R NRV.Responder
do you want to write it off completely?
@@RazorAccounting Thanks for the response, I really appreciate it. Well in any case a receivable that is written off could be reestablished if the delinquent decides to pay. So I'd so no (mmm not really), not quite sure how i should respond to your question
@@budomushin if you want to create an allowance for doubtful accounts entry do that in the general journal. Do yo have the appropriate GL accounts set up?
@@RazorAccounting Yes I believe so. I guess my issue is that I'd like the AFDA to be displayed as a contra asset below the A/R, reducing it to A/R NRV. So for that to be the case it would have to be of type A/R, but I don't think QuickBooks allows you to have more than 2
@@budomushin Unfortunately in QB we don’t seem to have the ability to control the placement of the accounts in the balance sheet. For presentation purposes I would recommend exporting the Balance Sheet into excel then re arranging the accounts as required for your purposes.
My QB system is on a cash basis , not accrual
How do I write off a year old open invoice?
Since it’s cash basis, can I simply void it?- or write a credit memo applied to it? Or something else.
Thanks.
I hate to mess with old established invoices!!
Hi Michael, I don’t really understand how you can be using a cash basis and still have an amount in accounts receivable. Cash basis would not record accounts receivable at all. Can you explain how you do this so I have give you a better answer? Thanks
@@RazorAccounting you actually answered my original question already. For some reason the question was printed twice.
In any event, for clarification :
I have a partially paid invoice from mid 2021 which is now deemed to be uncollectible in full. I’d like to write off the rest. The amount remaining is in accounts receivable and I am on cash basis accounting, QuickBooks desktop 2020 pro.
The real question I had was how to write it off. Since I know that bad debt doesn’t apply to cash based accounting (I won’t be paying income tax on the remainder), then why use a bad debt account?
Sorry for the confusion. Thx again
If the tax return has not been filed yet for the 2021 tax year you can adjust the invoice to match the amount the customer has paid. However, if the tax return is filed you cannot change anything in that period and in that case you would report a bad debt in the current tax year to remove the amount from accounts receivable and balance out reported income with a bad debt expense in the current tax year.
@@RazorAccounting I believe @Michael Slavin is correct, cash basis operations are not allowed to write off bad debt. Can you confirm this @Razor? TIA!
2:23 I don't have a "Bad debt expense" in the drop down
It is so inconvenient that you can't write off multiple invoices at the same time. Frustrating when you want to write off the uncollectable finance charges that have accrued over time, and might have 20-40 lines with automatic monthly finance charges.
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