View source for Bad Debt Write-off

Common Question:
How do I deal with an invoice that the customer is not going to pay?
 
I have an invoice that has both parts and labor.  After we did the work, the customer declares bankruptcy.  Do I just delete the invoice?  Will the parts go back into inventory?  I don’t want that to happen, since we did put the parts on the customer’s equipment.
 
Also, do I have to zero out the price on all of the parts and labor first?

Suggested solutions, pick one:
# Add a service item to the order/invoice with a negative amount of the whole.  It's recommended to have a service item for "discounts" so this can be used.  Service items can have a negative amount.
# Create a "balancing payment".  Go to the invoice and to the payments tab and select Balancing Payment and it will record a payment for the total amount.  It will ask if you want to sync it to QB which I would probably say no in this case and then manage the write off in QB separately.