Recording tricky accounts receivable transactions in QuickBooks

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 By Irene Bushnell and Kevin Cumley

Which tricky transactions, you ask? You know, those once-in-a-while transactions that always give you a headache (and you can never figure out or remember how to do), such as recording bad debt, trading receivables with payables, and recording customer down payments. Let’s look at a few of them and discuss the best way to record those transactions in QuickBooks. Recording Bad Debt Unfortunately, there are times when someone doesn’t pay an invoice and we need to write off the transaction as bad debt. No, please don’t take the easy way out and just void the invoice! It’s important for organizations to track bad debt to help manage the finances of the business. The method described below is particularly useful because it creates a document (a credit memo) that accurately describes the written-off receivable.
  • Set up an Item called Bad Debt Write-Off. The item can be an Other Charge type and be linked to the Bad Debt Expense account in the chart of accounts.
  • Create a credit memo for the receivable being written off. In the credit memo, use the item created above and write notes for yourself about the debt being written off. Be sure to include all the details you may need later on. This leaves a well-documented paper trail for future reference.
  • Use the Receive Payments window to apply the credit to the outstanding invoice.
 Trading or Bartering Using Accounts Receivable and Accounts Payable Have you ever had a customer who wants to trade what is owed to your company for a service or item you purchased from him/her? If you record such transactions with the method described below, you have a more accurate picture of total income and expenses, even though the net effect on your income statement is zero.

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By Mike
Jun 26th 2015 01:11

my question is in relation to the receive payment/pay bill.... I have a client who has a credit for an hst return that the govn applied to his account owing. how would you sugguest I go about this as it never goes into the bank??

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By QB newbie
Jun 26th 2015 01:11

I want the offset for my accounts receivable upload to be deferred revenue. can this be done?

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By jb
Jun 26th 2015 01:11

Why don't my payments for a client get posted to the journal?

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By shawnicans
Jun 26th 2015 01:11

I have a tricky one. I purchased advertisement in a magazine and $150 of the bill was negotiated to be 3- $50 gift certificates for product we manufacture. How do I do the accounting on this when a certificate of $50 is applied to an invoice??

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By cc
Jun 26th 2015 01:11

We are a general contractor who uses a third party network for some insurance work. They pay us the final payment from the insurance company. We unfortunately used a bad contractor and had to pay back the customer for an entire project. The third party company we use took this out of a final payment for another project. How do I record this so that the new project reflects payment in full when in actuality we did not physically receive the money.

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By Trey
Jun 26th 2015 01:12

Hi, I have a question -

In the case of a construction company that takes a downpayment before the work was started and wants to invoice when the work has been completed - Is there a way to take the down payment without having a credit on AR and recording revenue? We don't want to understate the AR by having a credit on there and we don't want to overstate revenue by recording income that hasn't been "earned" yet because the actual work hasn't been done.

Thanks

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By Mahoro
Dec 29th 2015 20:05

Hi. I use QuickBook UK version. My question is in relation to the way invoices and bills are recorded. Whenever I create an invoice, it gets recorded both in Account Receivable and the bank account set for the item I'm raising it for. As a result, when I receive the payment, the amount gets balanced out in the bank account. Same situation for the bill: it gets recorded both in the Account Payable and bank account, with the same outcome as above.

Why is this happening and how can I solve this problem?

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By drusieu
Apr 9th 2016 01:28

Double entry manual bookkeeping.
Down payment of 50% for custom made furniture.
Remainder paid in full upon delivery.
What should I do as bookkeeper?

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Apr 28th 2016 21:16

We recently upgraded our phone system and are thinking about selling our old phones. What category in the Chart would I use to record the income in Quickbooks?

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