If the bad debt is in your AR, I apply a payment to the account to clear the entry from AR. Than make a GL CR to credit your bank account and debit your Expense account Bad Debt.
 
John

We do the same thing that Ragine does and it works great for use.
 
Side note:  we do not send a paid-in-full statement to the customer.  And, actually have received funds a year or so down the road when the customer wanted new product.  (Of course the new sale was CASH UP FRONT).  At that time we enter an AR Voucher (AR-B again) for the amount of the bad debt and continue on as normal.