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GolfNut72
Level 4

Clearing Accounts - Quickbooks Desktops

I have read the information here on setting up a clearing account but I still have some questions that I need help to resolve.

 

In this case, I am dealing with a client that has outstanding A/R and A/P going back to 2010.  After discussion with his CPA, I will use a clearing account to remove old information from A/P and A/R between 2010 and 2017 and the CPA will do the appropriate adjustments.

 

I was planning to create two clearing accounts, one for A/R and one for A/P.  Is there any reason I should not do that? 

 

Also, I was reading one of the posts here about making journal entries, which I understand but I do not understand the linking of the JE with Receive Payments or Pay Bills?  Can someone explain that to me?

 

Thank you

EJ

 

 

 

Solved
Best answer April 19, 2021

Best Answers
Rubielyn_J
QuickBooks Team

Clearing Accounts - Quickbooks Desktops

I've got your back, @GolfNut72. I'm here to clarify things about setting up clearing accounts in QuickBooks Desktop.

 

Clearing Account is used to move money from one account to another when you can't move the money directly. That said, you can create one since it will be used in Journal Entry. 

 

With regards to your second concern, linking the JE with receive payments or pay bills will ensure that the transactions are settled or closed. Linking means applying the journal entry to your existing bills or open invoices. 

 

If you need additional info on how to manage clearing accounts, feel free to open this article: Set up a clearing account.

 

Additionally, I'll be sharing with you the following pointers on how to write off vendor balances as well as removing vendor credits from bills:

 

 

Let me know if you have further questions about handling A/R ad A/P transactions in QuickBooks. I'll be around to help you more. Have a nice day ahead.

View solution in original post

5 Comments
Rubielyn_J
QuickBooks Team

Clearing Accounts - Quickbooks Desktops

I've got your back, @GolfNut72. I'm here to clarify things about setting up clearing accounts in QuickBooks Desktop.

 

Clearing Account is used to move money from one account to another when you can't move the money directly. That said, you can create one since it will be used in Journal Entry. 

 

With regards to your second concern, linking the JE with receive payments or pay bills will ensure that the transactions are settled or closed. Linking means applying the journal entry to your existing bills or open invoices. 

 

If you need additional info on how to manage clearing accounts, feel free to open this article: Set up a clearing account.

 

Additionally, I'll be sharing with you the following pointers on how to write off vendor balances as well as removing vendor credits from bills:

 

 

Let me know if you have further questions about handling A/R ad A/P transactions in QuickBooks. I'll be around to help you more. Have a nice day ahead.

View solution in original post

Rubielyn_J
QuickBooks Team

Clearing Accounts - Quickbooks Desktops

Hi, @GolfNut72.

 

Hope you’re doing great. I wanted to see how everything is going about the clearing account concern you had the other day. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.

 

Looking forward to your reply. Have a pleasant day ahead!

GolfNut72
Level 4

Clearing Accounts - Quickbooks Desktops

Rubielyn_J

 

Thanks for following up.  I am still working through the issues but I believe I understand the use of a clearing account.

 

This leads me to another issue and the best way to resolve it - 

 

1 - The client writes a manual check to a subcontractor or vendor without a "bill" from the vendor.  In some cases, it is a deposit on items being purchased and in other cases, it is for something related to overhead (i.e. office supplies, taxes, etc.)  How would I clean up previous years that have this problem?  would I delete the check/EFT for the entry and then enter a bill, and pay it again, or is there a better way?

 

Thanks

 

EJ

 

 

 

katherinejoyceO
QuickBooks Team

Clearing Accounts - Quickbooks Desktops

I appreciate you for responding to our follow-ups, @GolfNut72. We want to make sure everything is all good to go on your end. 

 

When paying a bill, it should be done via the Pay Bill option. But since you wrote a check instead, we can create a bill and then link it to the check to resolve this issue.

 

First off, let's open the written check and follow the steps below to change the account associated with the check: 

 

  1. Go to the Expense tab, then change the account associated with the check to Accounts Payable.
  2. In the Customer: Job column, select the name of the vendor or any agency where you paid the bill.
  3. Click Save and Close.

 

Once done, you can now create the bill. Then, let’s pay the bill by applying the written check.

 

Here’s how:

 

  1. Go to Vendors, then choose Pay Bills.
  2. Select the bill you want the payments to be applied to.
  3. Click Set Credits, then go to the Credits tab.
  4. Put a checkmark on the check, and hit Done.
  5. Click on Pay Selected Bills.

 

For more insights, you may also check out this article: Bill shows as unpaid after writing a check.

 

For future reference, check out this article to help you learn about the Accounts Payable workflows in QuickBooks Desktop

 

Let me know if you have additional concerns. We're always around here to attend to all your needs. 

 

GolfNut72
Level 4

Clearing Accounts - Quickbooks Desktops

katherinejoyceO

 

Thank you for your reply with the details about correcting checks that weren't associated with a bill.

 

A follow-up question (maybe should be a new post but I'm not sure)

 

My client pays his business credit card without importing the credit card charges, he just determines the amount he wants to pay, and then writes a check.  When I discovered this, I was able to reclassify the check from A/P to the actual credit card liability account, but I'm not sure that is the "best" way.  Can you provide me additional information for this?

 

Thank you

EJ

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