Can QuickBooks deal with Contra Transactions eg, a company owes me £6400 but I owe that company £3000 so there’s only really £3400 owed to me can QuickBooks follow this?

jandmtravel · ‎February 04, 2020

EmmaM · ‎February 04, 2020

HI jandmtravel

To do the contra transaction you can do a journal entry (in this scenario you have a bill and invoice to attribute the contra payment to)

1.select the + symbol and journal entry

2.line one use the debtors account and put the payment amount £3000 under debits and in the name select the customer name

3.line 2 select the creditors account and put the payment amount £3000 under credits and in the name select the suppliers name

4.date and save the journal

5.Go to the invoice for the customer and go to receive payment and tick the journal and save making sure the payment is £3400(sometimes it will default to receive the rest)and it will then leave £3400 as being owed by them

6.Go to the invoice for the supplier and go to make payment and tick the journal it will then leave you with the amount you owe when the journal is applied if the bill is for £3000 it will close the bill as paid

There are other ways to do this so we would recommend confirming with your accountant they are happy with that

Emma

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EmmaM · ‎February 04, 2020

HI jandmtravel

To do the contra transaction you can do a journal entry (in this scenario you have a bill and invoice to attribute the contra payment to)

1.select the + symbol and journal entry

2.line one use the debtors account and put the payment amount £3000 under debits and in the name select the customer name

3.line 2 select the creditors account and put the payment amount £3000 under credits and in the name select the suppliers name

4.date and save the journal

5.Go to the invoice for the customer and go to receive payment and tick the journal and save making sure the payment is £3400(sometimes it will default to receive the rest)and it will then leave £3400 as being owed by them

6.Go to the invoice for the supplier and go to make payment and tick the journal it will then leave you with the amount you owe when the journal is applied if the bill is for £3000 it will close the bill as paid

There are other ways to do this so we would recommend confirming with your accountant they are happy with that

Emma

paul72 · ‎February 04, 2020

Hi @jandmtravel

The Journal method from @EmmaM is neater because it's one transaction plus the reconcile but, if it's something you do regularly & maybe need to locate quickly, you can create a dummy bank account (Contra) from which you pay (or into which you receive) the overlap.

Any actual payment still goes out of (in to) your usual account.

pondball · ‎February 09, 2021

This is as much a question regarding Contra for @EmmaM as anybody else.

Emma, your explanation was as clear as any I have found regarding posting Contra, however being a non-accountant I'm still struggling a bit with our own scenario.

I have a similar case, however in my case, I owe the customer less than what they owe me and while they owe me from last year, I owe them from this year. (Cdn$ to a UK supplier, however everything we post is in Cdn$)

ie.

• I sent them an invoice for $3,000 in November of 2020, payable as a contra from their upcoming shipment to us.

• I received goods from them in January of 2021, with an invoice for $10,000 - payable at time of delivery.

• As a Contra transaction (their request), our final amount due to them is $7000

This is what I entered in a Journal Entry with both dates being the November, 2020 date. The name in the Receivables was the Company who owed us (Customer), while the name in the Payables row was the same Company (Supplier). (image of journal entry below)

The remaining $7000 was paid and Bank Feed amount was cleared. However it still shows me as owing $3000 to the Customer. Is there something I'm missing?

Edit! Ok... doesn't this always happen! Being relatively new to QBO, I wasn't aware of what might be the last step to clear the Payable. I just clicked on the invoice that still had the $3,000 owing and "just for fun" clicked on make payment... and up popped the option of using the journal entry (with matching $$). I clicked on it and now the Payable reads a $0! I hope this was the correct procedure, and if so please verify as it may help someone else in future too! Cheers

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Can QuickBooks deal with Contra Transactions eg, a company owes me £6400 but I owe that company £3000 so there’s only really £3400 owed to me can QuickBooks follow this?