A.4.9b Writing off with a Credit Memo | Scribe

    A.4.9b Writing off with a Credit Memo

    • 30 steps
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    Start in the Sample company.
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    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.
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    Note that you will be logged out of your current account. If you are sure, click "Continue" to confirm.
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    If you haven't done so already, make sure you review [how to create and apply a credit memo](https://scribehow.com/shared/32_Create_and_Apply_a_Credit_Memo__89k4JzomTBG2JjAZA7b93Q), so you're familiar with the process in general. You'll also want to familiarize yourself with [how to write off an invoice.](https://scribehow.com/shared/A49a_Writing_Off_Invoices__za_QXiLXTO-QQ_2VE158Lg)
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    Now let's get started with the exercise. First, we need to set up a Bad Debts expense account.
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    Click "Accountant Tools", then select "Chart of accounts".
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    Click "New".
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    Click the "Expenses icon".
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    In the Save account under field, select "Expenses".
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    In the Tax form section, select "Bad Debts".
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    In the Account name field, type "Bad Debts".
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    Click "Save".
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    Next, you will need to create a Bad Debts service item.
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    From the left navigation bar, hover over Sales, then select "Products & services".
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    Click "New".
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    Click "Service".
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    In the Name field, type "Bad Debts". *Leave the box checked next to I sell this product/service to my customers.*
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    In the Income account field, select "Bad Debts" (even though you set it up as an expense account).
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    Click "Save and close".
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    Before we create the Credit memo, let's take a look at Travis' outstanding invoice. We'll need to know the total.