Hot to apply a credit on our CC to the Bill Credit for that vendor

Blue-River · ‎December 21, 2021

This situation involves bill, bill credits, and credit card refund (credit) from a vendor (not a customer). We'll call the vendor ABC. All previous transactions with ABC have been credit card charges (no bills or bill payments). We'll call our company XYZ.

XYZ owes ABC $100 but a payment is not not made because previously purchased items are returned. The total of the returns is $200

ABC issues XYZ a credit memo of $200

XYZ creates Inv 1 for $100 and a Credit Memo 2 for $200

XYZ applies $100 of CM 2 to Inv 1

XYZ will not be using ABC in the future, so it needs ABC to refund them

Vendor Center shows a credit balance of $100 for ABC

ABC credits XYZ's CC $100

XYZ creates a Credit Card Credit of $100

XYZ has been repaid the money owed but the Vendor Center still shows a credit of $100 for ABC

How does XYZ apply ABC's Credit Card Credit to Credit Memo 2?

KlentB · ‎December 21, 2021

I'll help you in handling that transaction, Blue-River.

Please know that a bill credit can only be applied to an open bill to reduce its total balance. We're unable to apply a credit card credit to a bill credit since both transactions are considered as returns/refunds.

To zero out the existing balance, you'll need to create a journal entry and then apply it to the existing credit. Before doing it, I encourage consulting an accounting professional to ensure that everything is properly recorded.

When you're ready, here's how:

Go to the Company menu.
Select Make General Journal Entries.
Change the date and fill in the entry number if necessary.
Select the Account field and then choose Accounts Payable from the dropdown list.
Enter the amount under the Credit column, then select the vendor name in the Name column.
In the next line, select the Offset account and enter the amount under the Debit column.
Click Save and close.

Once done, follow these steps to apply the journal entry to the credit:

Go to the Vendors menu.
Choose Pay Bills.
Select journal entry or bill then, select Set Credits.
Under the Credits tab, select the available credit.
Click done Done, then select Save & Close.

I've also included an article that will help you in tracking the money you owe your vendors: Accounts Payable workflows in QuickBooks Desktop.

Just leave a comment below if you have any other concerns or follow-up questions. Have a good one.

View solution in original post

KlentB · ‎December 21, 2021

I'll help you in handling that transaction, Blue-River.

Please know that a bill credit can only be applied to an open bill to reduce its total balance. We're unable to apply a credit card credit to a bill credit since both transactions are considered as returns/refunds.

To zero out the existing balance, you'll need to create a journal entry and then apply it to the existing credit. Before doing it, I encourage consulting an accounting professional to ensure that everything is properly recorded.

When you're ready, here's how:

Go to the Company menu.
Select Make General Journal Entries.
Change the date and fill in the entry number if necessary.
Select the Account field and then choose Accounts Payable from the dropdown list.
Enter the amount under the Credit column, then select the vendor name in the Name column.
In the next line, select the Offset account and enter the amount under the Debit column.
Click Save and close.

Once done, follow these steps to apply the journal entry to the credit:

Go to the Vendors menu.
Choose Pay Bills.
Select journal entry or bill then, select Set Credits.
Under the Credits tab, select the available credit.
Click done Done, then select Save & Close.

I've also included an article that will help you in tracking the money you owe your vendors: Accounts Payable workflows in QuickBooks Desktop.

Just leave a comment below if you have any other concerns or follow-up questions. Have a good one.

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Hot to apply a credit on our CC to the Bill Credit for that vendor

Hot to apply a credit on our CC to the Bill Credit for that vendor

Hot to apply a credit on our CC to the Bill Credit for that vendor

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