QuickBooksForum.com.au

Hi .. I was wondering if anyone knows how to record bad debts as per the quickbooks plus 08/09 instructions below:  (its kinda hard when I can't find the discount account or discount tab area anywhere??).  i'm thinking the help button must be for another version?  any ideas?  appreciate it.   
oh ... here's the F1 guide..

Go to the Customers menu and click Receive Payments.
Select the name of the customer from whom you incurred the bad debt.
Leave the amount field at 0.00.
Click on the line item that will not be paid to highlight it.
Click Discount & Credits.
Your bad debt expense account should already appear in the Discount Account field on the Discounts tab.
Enter the amount of the bad debt in the Amount of Discount field.
Click Done in the Discount and Credits window.
Note: The procedure described above does not affect your tax liability.
In the Receive Payments window, save the bad debt transaction.

I followed these instructions, and I too, cannot find a discount field. I think it might have to do with the customer being associated with a discount first.  We do not give discounts.  Even so, it says this method does not effect your tax liability.  This is not good, because you still need to know to do an entry the fix the tax situation.  If you are paying tax on an accruals basis (as against a cash basis), then you would have paid gst when the sale was initiated.  When you have a recognised bad debt you are allowed to recover that gst from the ATO.  Effectively you would credit the customer the total, and the other side, you would credit Bad Debts for the sales portion and GST Tax Acct. for the gst portion.

The discount tab exists in the US version, but was removed from the AUS version at the last minute because the TAX wasn't being handled correctly. I believe the help file was not updated to reflect this. In fact, so many resources went into the 08/09 product that the help file was basically the US version (with the obvious exceptions of tax codes/payroll etc...).

The best way to handle a bad debt is using an ADJUSTMENT NOTE. Set up an item called Bad Debit and point it to a bad debt expense account (in reality it should be a sales account with a journal to reduce the sale and increase the bad debt expense as QuickBooks reports will be effected by using expense items in sales transaction - which an adjustment note is).

Adjust the outstanding balance, then go to Customer Payments and clear the receivable balance (in QuickBooks 08/09 and above you can do this at the time of saving the Adjustment Note without having to open Customer Payments).

NB. The Discount Tab mentioned by the above 2 posts has not forced its way into QB 09/10.



Regards,

Jason Hollis
QuickBooks Accredited Partner
www.quickbooksolutions.com.au