I've jumped into a QBD that has old vendor credits that are no longer legitimate. What is the best process for clearing these.
That's a great question. Clearing out these kinds of transactions is a good way to make sure your books are up-to-date and properly balanced. I recommend checking in with an accountant to see what the best way is to handle this scenario, but I'll let you know what options are available in QuickBooks Desktop for handling that kind of transaction.
On the transaction window of the vendor credit, you've probably noticed the Delete button in the toolbar. This is one way that you can delete the credit. Another option is clicking the drop-down arrow under the Delete button, which again gives you the option to Delete and also the option to Void. Choose whichever is most appropriate for your case. Deleting it would remove it from QuickBooks entirely. Voiding it keeps the transaction in your books while voiding it declares it as no longer legitimate.
If the vendor has given the company the money for the balance of the unused credits, that can be recorded as a cheque using the Write Cheques feature found on the home screen or under the Banking menu. If they haven't, consider the options in the Write off customer and supplier balances article.
In case you come across an instance in which a vendor credit was incorrectly applied, follow the step to remove or unapply a credit from an invoice or bill. You can also use our Find a ProAdvisor tool if you're in need of an accountant. Using your postal code to search your area, you can find one who knows QuickBooks Desktop.
I hope that helps. Enjoy the rest of your day. :)
I don't recommend deleting any vendor credits, especially if they have been on the books for a long time or if they span a wide time frame. By deleting them, you are affecting multiple previous periods and could be causing a world of hurt for yourself by knocking your Trial Balance out of whack. Keep in mind that deleting the vendor credit not only deletes the transaction from the A/P ledger, but also deletes the GL expense account that was used as well as the any tax amounts.
There are a couple of ways to clear vendor credits that you believe should no longer be there, although, I wonder what renders them invalid? If they were a valid credit at one time, why were the credits never used against subsequent bills or reimbursed by the vendor? That's a whole other question that should be investigated.
1) Create a bill that is exactly the opposite of the credit, using the same expense accounts and tax codes, but dated in the current period. Use the 'Pay Bills' window to 'pay' the invoices with the existing credits.
2) Create a General JE with Accounts Payable in the first line, CR the total amount, tab over to 'Name' and enter the name of the vendor. On 2nd and subsequent lines, enter the expense account(s), DR amount, and tax line. When entering taxes in a GJE, use the tax payable liability account, then tab over to 'tax item' field and enter the item code used for your GST/HST ITC's, so that the tax is coded properly to show up on the tax reports. As in #1, use the 'Pay Bills' window to 'pay' the amount you just created with the existing credits.
The easier of the two is definitely #1, but for whatever reason, some people may have their own reasons for adjusting with a GJE instead. Either way gets you the same result.