It’s not uncommon for businesses to have small balances that need to be written off. Maybe a customer owes you a small amount due to an overpayment, or perhaps you owe a vendor or supplier a small amount due to a similar reason. In many cases, small balances aren’t worth pursuing. Rather than collecting them, you may want to write them off. If you use QuickBooks Desktop, you can easily write off balances in just a few simple steps.
Create a Journal Entry
You can write off balances in QuickBooks by creating a journal entry. Journal entries, of course, are used to move money between accounts. They allow you to correct inaccurate balances. But you can also use journal entries to write off small balances.
To write off a balance using a journal entry, head over to the “Company” menu and select “Make General Journal Entries.” You should see a new window appear. You’ll need to enter the appropriate information in this window to write off the balance. If it’s an overpayment, choose “Accounts Receivable” from the “Account” drop-down menu. You can then enter the amount in the “Debit” column. If it’s an underpayment, you’ll need to enter the amount of the balance in the “Credit” column, instead.
Apply the Journal Entry
After creating the journal entry for the balance, you’ll need to apply it. You can apply journal entries in QuickBooks by navigating to the “Customers” menu and selecting “Receive Payments.”
You’ll need to enter some information about the balance. In the “Received From” field, enter the name of the customer or vendor for whom you are writing the off balance. You can then select the invoice, followed by choosing “Discounts and Credits.” When finished, select “Done” and then “Save & Close.” Keep in mind that these steps are specifically for writing off an accounts receivable balance. If it’s an accounts payable balance, the process is a little different.
Rather than creating a journal entry, you can write off small balances using discounts. Start by creating an account and an item. This is done by selecting “Charge Off Account.” Go to the “Lists” menu and choose “Chart of Accounts.” Under “Account,” select “New.” Next, select “Income” and then”Continue.”
You’ll need to choose “Minor A/R and A/P Charge-Off’ for the “Account” field. When finished, select “Save & Close.”
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