I have an account that was charged off when my business closed. How should I record that in QuickBooks?

Hi, dana.

If an account (e.g., loan, credit card, or liability) is charged off and won’t be paid, it should be recorded in QuickBooks as bad debt or an adjustment. Forgiven debt is categorized as income and may be taxable, while debt that’s still owed but charged off is recorded as bad debt or an offset.

Create an Expense Account for Bad Debt and a Journal entry to properly adjust and account for the unpaid balance in your books.

Here's how to create Expense Account for Bad Debt:

1. Go to the Gear icon.
2. Select Chart of accounts and click New account.
3. Set the details as follows:
* Account name: Bad Debt Expense
* Account type: Expenses
* Detail type: Bad debts
4. Click Save.

Creating Journal entry:

1. Go to +Create and click Journal entry.
2. Enter these details:
* Date: Use the date of the charge-off.
* Debit: Select Bad Debt Expense and enter the unpaid amount (e.g., £5,000).
* Credit: Select the liability or loan account where the balance resides and enter the same amount (e.g., £5,000).
3. Click Save.

* You can now check the Bad Debt Expense in the Chart of accounts.
* Check that the balance in the liability or loan account has been updated (likely £0 if fully written off).

You're all set. The charged-off amount is now properly reflected in your books.

Feel free to reply below if you have further questions.