How to write off a bad debt?
SOLUTION:
1. Go to "Setup Tools" -> "Configuration" -> "Category Setup"
2. Create a new main category and name it "Miscellaneous" or "Misc".
Note: Proceed to step 3 if you already have a “Miscellaneous” main category.
3. Create a new sub category under the "Miscellaneous" main category and name it as "Bad Debts”.
Make sure to set the Type as “Non Inventory” or “I”.
Set also the income and cost ledger to whatever ledger number that you would like to use for the Bad Debts.
Then click the “Create Ledger Numbers” button.
4. Create a new inventory item on the sub category “Bad Debts” and name it as “Bad Debt”.
Make sure the cost is 0, no supplier attached to it and no taxes.
5. Create a new A invoice for the customer that you are writing off.
6. Add the “Bad Debt” item.
7. Set the Quantity to -1.
8. Enter the price that you are writing off.
9. Exit the invoice.
10. Create a new Payments on Account for the same customer.
11. Pay both the invoices and the net result should be 0.
12. Click “Apply” and print.