My question is what's the correct way to bad debt an inventory item? We have an item that we want to take out of inventory and put to bad debt. I have played different scenarios in my head but not sure which way is the proper way and which GL's it's going to hit. Initially we thought that we could just transfer the product out of inventory. But we can't seem to locate where we could label that transfer as bad debt. I then thought that maybe we could do a return of goods of the item, but again, we can't seem to locate where we can label it as bed debt. Then I thought I could issue a credit memo for the item and then set it to bad debt. I feel like this option is the correct one. Accounting is also worried about what GL's will be hit in any of these scenarios.