Record supplier prepayments or deposits in QuickBooks Desktop

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EN: https://quickbooks.intuit.com/learn-support/en-ca/help-article/other-articles/record-supplier-prepayments-deposits-prepaid-parts/L516m2tcF_CA_en_CA?uid=lcrtg6ow

Find out how to record supplier prepayments or deposits in QuickBooks Desktop.

Track your prepayments accurately to maintain smooth transactions and timely payments. You can record them in two ways: through Accounts Payable or an Asset account. Here’s how.

Tip: Check with your accountant to find the best option for your business.

Record prepayment using Accounts Payable

Write checks to your suppliers and track them in Accounts Payable as money owed. This lowers your balance until you're ready to enter the final bill and process the invoice.

1. Create a check for the supplier.
   1. Go to Banking and select Write Cheques, or press Ctrl + W.
   2. Select the supplier name, date, and payment amount.
   3. Go to the Expenses tab. In the Account column, select Accounts Payable.
   4. In the Customer:Job column, from the dropdown select the supplier name.
   5. Select Save & Close.
2. Enter the bill.
   1. Go to Suppliers and select Enter Bills or Receive Items (if you like to record the bill later).
   2. Fill in the necessary information.
   3. Select Save & Close.
3. Apply the prepayment to a bill.
   1. Go to Suppliers and select Pay Bills.
   2. Select the bill you want to associate with the prepayment.
   3. Select Set Credits.
   4. The prepayment will display in the Set Credits screen. Make sure it is checked, then select Done.
      Note: If there is a balance due on the bill, QuickBooks will create a Bill Payment Cheque.

Record prepayment using an Asset account

Write checks to your suppliers and track them in an Other Current Asset (OCA) account. This records prepayments for future goods or services. It also increases your balance until you're ready to pay the final bill and process the invoice.

1. Create an Other Current Asset (OCA) account to track prepayments.
   1. Go to Lists and select Chart of Accounts, or press Ctrl + A.
   2. Select the Account dropdown ▼, then select New, or press Ctrl + N.
   3. From the Other Account Types dropdown▼, choose Other Current Asset. Select Continue.
   4. Enter Prepaid Inventory as the Account Name.
   5. Select Save & Close.
2. Write a check to your Supplier.
   1. Go to Banking and select Write Checks, or press Ctrl + W.
   2. Enter the supplier name, date, and payment amount.
   3. Go to the Expenses tab. In the Account column, select the OCA account.
   4. Select Save & Close.
3. Enter the bill when the items arrive.
   1. Go to Suppliers and select Enter Bills.
   2. Go to the Expenses tab, then select the OCA account.
   3. Enter the amount of the prepayment as a negative value.
   4. On the Items tab, enter the items. 
      Note: When you record the bill, it reduces the asset account to match the amount you owe after the prepayment.
   5. Select Save & Close.
4. Pay the bill balance.
   1. Go to Suppliers and select Pay Bills.
   2. Select the bill you entered, then select Pay Selected Bills. This creates a Bill Payment Check for the balance.

View existing prepayments

1. Go to Reports and select Suppliers & Payables and then Supplier Balance Detail.
2. Select Customize Report, then go to the Display tab.
3. Select the date range for the report.
4. Select the Filters tab, then select Account from the list.
5. From the Account dropdown ▼, select the asset account created to track prepayment amounts.
6. Select OK.