Record supplier prepayments or deposits for prepaid parts or services

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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

When you order a part or a service from a supplier, the supplier might need you to pay a portion of the price before delivery. You have two options for entering the prepayments or deposits, either by using Accounts Payable or an Asset account. Consult your accounting professional to know which option is best for you.

Option 1: Use Accounts Payable to record prepayment

You can write a cheque to the supplier and record it to your Accounts Payable (A/P) account, decreasing the balance until you are ready to enter the final bill.

1. Create a cheque for the supplier.
   1. Go to the Banking menu, then select Write Cheques.
   2. Enter the supplier name, date, and payment amount.
   3. Go to the Expenses tab. In the Account column, enter Accounts Payable.
   4. In the Customer:Job column, select the drop-down, then choose the supplier name.
   5. Select Save & Close.
2. Enter the bill.
   1. Go to the Suppliers menu, then 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 the Suppliers menu, then select Pay Bills.
   2. Highlight 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.

Option 2: Use an Asset account to track the prepayment

You can write a cheque to the supplier and record it to an Other Current Asset (OCA) account, increasing the balance until you are ready to pay the final bill.

1. Create an Other Current Asset (OCA) account to track prepayments.
   1. Go to the Lists menu, then select Chart of Accounts.
   2. In the Chart of Accounts, right-click anywhere, then select New.
   3. From the Other Account Types drop-down, choose Other Current Asset. Select Continue.
   4. Enter Prepaid Stock as the Account Name.
   5. Select Save & Close.
2. Write a cheque to your Supplier.
   1. Go to the Banking menu, then select Write Cheques.
   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 the Suppliers menu, then 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. The bill will equal the balance owed after deducting the prepayment. Note that recording the bill will reduce the asset account.
   5. Select Save & Close.
4. Pay the bill balance.
   1. Go to the Suppliers menu, then select Pay Bills.
   2. Select the bill you entered, then Pay Selected Bills. QuickBooks will then create a Bill Payment Cheque for the balance.

View existing prepayments

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