Remove a Credit

[chad4jc]

There is a balance on a former clients account that I need to remove. What is the best way to do that?

If it's a bad debt, you can discount the remaining balance to a bad debt expense account (if not a bad debt, any other acct you choose). You can set a discount in the Receive Customer Payment Window.

Did you receive the full balance from the customer? Perhaps it's a payment that was entered twice?

[chad4jc]

It is a overpayment that a client made and the business went under, so there is no one to send a check to. I need to remove the credit from there account some how.

I'm sorry, I misunderstood. Normally a customer balance in QB A/R means that a customer owes you money, as I understand it.

You can do a Journal entry to another account, perhaps your income acct, but your accountant should really be involved in this.

Any other ideas out there?

[PaulGD]

If it's a small amount, write a cheque in favour of the customer but make the payee "Cash".
Cash the cheque, and put it in an envelope in the safe. Over the next year or so make strenuous efforts to contact the ex-customer to tell him you are holding some money for him. Include writing to him and keep a copy of the letter.
Strangely, these attempts will almost certainly fail, so after a reasonable period, you can donate the money to charity (or the office party fund) as you see fit.
Your accountant probably wouldn't suggest this openly, but it's the obvious answer. Your books are straight and you can show that you tried to do the right thing.

If you consider that the credit is too large to have the cash lying around, set up a new balance sheet Liability account called "Long Term Customer Deposits" and make a journal posting from A/R to there. At some time in the future, you can write a cheque to clear this account - whether the money goes to "charity" or back to the customer, if he appears. Memo the transactions so you don't forget what it's all about and as before, make sure that you can demonstrate how hard you tried to get in touch with the fellow.

Either of the above courses will allow you to make the appropriate transactions in the Customer Payments screen to get his account to show a zero balance.