Overview
Unfortunately, you might have a tenant move out without paying the rent they owe. There are several ways to record this in DoorLoop. However, it's always best to speak with your accountant about how to handle this for your situation.
Here we'll walk through writing off the unpaid rent as a bad debt expense. For the first time only, you will need to create two new accounts in your Chart of Accounts. After that, you use a journal entry to write off the unpaid rent.
Note that this method is only if you follow accrual-based accounting only. Learn what the difference is between cash vs. accrual accounting.
Create the Accounts
The first time you write off unpaid rent as a bad debt expense, you will need to create two new accounts in your Chart of Accounts.
One is an expense account called Bad Debt Expense
The other is a sub-account of Accounts Receivable called Allowance for Doubtful Accounts.
Step 1 - Creating the Bad Debt Expense Account
From the main menu click Accounting and then click Chart of Accounts.
In the top right corner of the page, click on the + New Account button.
Select Expense in the Type dropdown menu.
Enter Bad Debt Expense in the Account Name field and add an optional description for your reference.
Leave the Active Account toggled on.
Click the Lease Options tab and turn on the toggle for Use this account for Lease Charges.
Click Save to finish creating the account.
Step 2 - Creating the Allowance for Doubtful Accounts Sub Account
From the main menu click Accounting and then click Chart of Accounts.
In the top right corner of the page, click on the + New Account button.
Select Asset -> Accounts Receivable in the Type dropdown menu.
Use Allowance for Doubtful Accounts for the name.
Leave the Active Account toggled on.
Toggle on This is a sub-account and select Accounts Receivable.
Click Save to finish creating the account.
Issue a Credit on the Lease
The next step is to issue the credit for the amount of unpaid charges on the Lease.
On the main menu, click Leasing and then click Active Leases.
Find and click on the Lease that requires the credit.
On the Overview page, click on the Transaction tab.
Click the Issue Credit button.
For the Account dropdown, select Bad Debt Expense.
Enter the amount of unpaid charges in the Amount field.
Click Save to finish.
Create the Journal Entry
Next, you will create a journal entry for the amount of unpaid rent. After creating the new accounts above, creating the journal entry is the only thing you will need to do to record unpaid rent as a bad debt expense.
From anywhere in DoorLoop, click on the + Create New button in the upper left and select Journal Entry in the Other Transactions section.
Set the Entry Date and select the Property associated with the unpaid rent.
On the first line, from the Account drop-down, select Accounts Receivable and add an optional Description. (Such as unpaid rent or something to remind you why you are creating this journal entry.)
Enter the amount of unpaid charges in the Debit column.
Click the Add Line Item button and select the Allowance for Doubtful Accounts account in the Account drop-down.
Enter the amount of unpaid charges in the Credit column.
When you're done, click Save.