QuickBooks Online really makes it easy to track your Accounts Receivable and Accounts Payable. To maintain this simplicity, Customers and Suppliers are considered completely separate entities within the program. But real life isn't always that simple. There are times when one of your customers is also your supplier. Thankfully, we're able to apply an Accounts Payable balance against Accounts Receivable using a simple transaction. I'll show you how this is done.
Before I get started, these steps assume this individual is set up as a supplier. I'll go over how to get them set up, but feel free to skip these steps if you're already ahead of me.
Setting up the supplier side is just a few simple steps:
Similarly, the customer side only takes a second:
It's important that both the customer and supplier sides have an open balance remaining. Once this is set up, we can proceed to the fun part. All it takes is a quick journal entry:
It should look something like this:
Once this Journal Entry is saved, we can immediately apply it against the bill and invoice. This is a quick but important step to ensure we have the correct balance owing:
Now you'll be left with the correct amount receivable.
Let me know if there's anything else I can help you with. This is a tricky transaction to record at first, but I'm confident you'll be a pro in no time!
Hi, I have a similar situation to the topic.
I tried to follow the steps but QB is not allowing me to enter Accounts Payable in the 2nd line. It has an error message that says: "Select a different type of account for this line. You can only select an accounts payable (A/P) or accounts receivable (A/R) account on the first line of a journal entry, and it can only be used once in the same transaction."
Basically, a Customer owes 30.00 but the same Customer is also a Vendor and we owe 200. Thinking of just cutting a cheque for 170 and apply the 30 to the A/R. Is there a way to do this?
Thanks for reaching out to us, @Abskiboo.
Allow me to share the steps to help you with this concern. For now, you can only assign one Accounts Payable and Accounts Receivable account on a journal entry. It can never have more than 2 lines for each account.
In this case, we can use a different method. This is a long and complicated process but I've added a step-by-step instructions for you to follow. Before anything else, enter a bill for $200 and delete the existing invoice of $30. Once done, set up the clearing account.
Step 1: Create a Clearing bank account.
Step 2: Transfer $200 from the main bank towards the clearing account.
Step 3: Edit the bill and add a discount item of $30. After that, pay the bill.
Step 4: For the remaining $30 on the clearing account, create a journal entry. Credit the clearing account and debit Accounts receivable. This process will automatically create an invoice for the customer.
Step 5: Receive the payment to put back the $30 in your checking account.
Now, the clearing account should have a zero balance. See this:
Post here again if you have other concerns about the process of applying the payments. I'm here if you need further help. Wishing you a great and productive day!