To complete this exercise, you must be in the Sample company. From your QBOA account, click on the Gear icon on the top right corner of the screen, then select Sample company.

Note that you will be logged out of your current account. If you are sure, click "Continue" to confirm. 

Now let's get started with the exercise.

First, let's take a look at Craig's Balance Sheet, so we can see how the current invoice is reflected there.

From the left navigation bar, click "Reports".

Because the invoice has not yet been paid, and because Craig is using accrual accounting, the $75 is already considered income. To see this, let's look at the Accounts Receivable (A/R) total.

On the Accounts Receivable (A/R) line, click "5,281.52".

To ensure we include all Accounts Receivable invoices, let's change the date range to All Dates.

Click the "down arrow" next to Custom dates, then select "All Dates".

The report will automatically update, but let's sort it so it's easier to find Kathy's invoice.

Click "Name" to sort the transactions alphabetically.

Scroll through the report to find the Kookies by Kathy outstanding $75 invoice.

Before we can write off this invoice, we need to set up an account that will track the Bad Debt expense.

Click "Accountant Tools", then select "Chart of accounts".

In the Save account under field, select "Expenses".

In the Tax form section, select "Bad Debts".

In the Account name field, type "Bad Debts".

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QuickBooks

QuickBooks is a widely-used accounting software developed by Intuit, designed to simplify financial management for businesses of all sizes. It provides a user-friendly platform for tasks like invoicing, expense tracking, payroll processing, and generating financial reports. QuickBooks automates many financial processes, making it easier for businesses to monitor their financial health, prepare taxes, and manage cash flow. With its various versions and integrations, QuickBooks caters to the needs of freelancers, small businesses, and larger enterprises, offering a flexible and comprehensive solution for efficient accounting and financial management.

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Scenario: Craig did some gardening work for Kookies by Kathy. It has been over 60 days, and she still hasn't paid her invoice. After many attempts and trying to collect, Kathy finally admitted that she was going out of business and wouldn't be able to pay.

Because Craig is an accrual-based business, he has already reported the accounts receivable as income, so he can't just delete or void the invoice. Instead, Craig will need to write off the invoice in QBO and record it as an expense.

A.4.9a Writing Off Invoices