QB Issue Resolution:

The article reference by the intuit rep, sort of work, but bypasses reporting – I suggest you do not use it

create a non inventory item named bad debt, and select a bad debt expense account on the non inventory item screen (create the bad debt expense account first if you need to)

create a credit memo for the customer, use that bad debt item, enter the amount, save

in receive payments, select the customer, the invoice and apply the credit memo, save

Resolution for Issue 'Need to clear out balance, send to bad debt and clear A/R.' available: Yes (Solved).
Source: Intuit Community forum.

Need to clear out balance, send to bad debt and clear A/R.: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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