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Hamza Dayr
Level 2

Prepayments beginning balance

My company decided to start using QuickBooks since 2021,as there is beginning balance for prepaid expense in 2020 and need to apply these prepayment for 2021 bills. In  addition, some of 2021 unpaid bills had  prepayments in 2020.

 

Solved
Best answer July 03, 2021

Best Answers
jamespaul
QuickBooks Team

Prepayments beginning balance

Hello, Hamza Dayr. 

 

You can record those 2020 prepayments using an Accounts Payable account, then apply them to your bills. I'll show you how its done in QuickBooks. I'll also explain the step-by-step process to help you familiarize the procedure. 

 

You would use the Write Checks feature and link the Accounts Payable account to it. This decreases the balance (or create a negative balance on the account), which denotes the prepayment. 

 

Here's how to do it: 

 

  1. Click the Banking menu, then select Write Checks.
  2. For Pay to the Order Of drop-down menu, add the vendor. 
  3. Set the Date to when the prepayment was made. 
  4. On the Expenses tab, choose Accounts Payable
  5. Enter the prepayment amount. 
  6. Add a memo and other information. 
  7. Click Save & Close

 

prep2.PNG

 

If you haven't already done so, you'll want to enter those 2021 bills. Check this article if you need help: Enter bills in QuickBooks Desktop.

 

When you're ready to apply the prepayment, simply record a bill payment for the unpaid bills. The prepayment would count as a credit for your bill.

 

When you pay it, this will zero out the Accounts Payable account (assuming all bills and prepayments are accounted for). 

 

Here's how to apply the prepayment on a bill: 

 

  1. Click the Vendors menu, then select Pay Bills
  2. Check the bills you want to pay. 
  3. To apply the prepayment checks, click the Set Credits button.
  4. Select the prepayment checks, 
  5. Click Done.
  6. Ensure the bill payment dates and information are correct.
  7. Click Pay Selected Bills

 

prep1.PNG

 

You'll also find this article helpful if you want to learn more about the process: Record vendor prepayments or deposits for prepaid parts or services

 

If you're doing these for corrections from a closed accounting period (closed books in early 2021), I'd recommend consulting an accountant first. They can give the appropriate steps to help you with the bill prepayments and apply these as corrections. 

 

Need to reconcile your 2020 bank accounts? I'm sure this article can help you with the process: Reconcile an account in QuickBooks Desktop.

 

Don't forget to reply to this thread if you need more help recording your vendor transactions. I'll also help you out with any other processes or tasks in QuickBooks. I'll see you around real soon. 

View solution in original post

4 Comments 4
jamespaul
QuickBooks Team

Prepayments beginning balance

Hello, Hamza Dayr. 

 

You can record those 2020 prepayments using an Accounts Payable account, then apply them to your bills. I'll show you how its done in QuickBooks. I'll also explain the step-by-step process to help you familiarize the procedure. 

 

You would use the Write Checks feature and link the Accounts Payable account to it. This decreases the balance (or create a negative balance on the account), which denotes the prepayment. 

 

Here's how to do it: 

 

  1. Click the Banking menu, then select Write Checks.
  2. For Pay to the Order Of drop-down menu, add the vendor. 
  3. Set the Date to when the prepayment was made. 
  4. On the Expenses tab, choose Accounts Payable
  5. Enter the prepayment amount. 
  6. Add a memo and other information. 
  7. Click Save & Close

 

prep2.PNG

 

If you haven't already done so, you'll want to enter those 2021 bills. Check this article if you need help: Enter bills in QuickBooks Desktop.

 

When you're ready to apply the prepayment, simply record a bill payment for the unpaid bills. The prepayment would count as a credit for your bill.

 

When you pay it, this will zero out the Accounts Payable account (assuming all bills and prepayments are accounted for). 

 

Here's how to apply the prepayment on a bill: 

 

  1. Click the Vendors menu, then select Pay Bills
  2. Check the bills you want to pay. 
  3. To apply the prepayment checks, click the Set Credits button.
  4. Select the prepayment checks, 
  5. Click Done.
  6. Ensure the bill payment dates and information are correct.
  7. Click Pay Selected Bills

 

prep1.PNG

 

You'll also find this article helpful if you want to learn more about the process: Record vendor prepayments or deposits for prepaid parts or services

 

If you're doing these for corrections from a closed accounting period (closed books in early 2021), I'd recommend consulting an accountant first. They can give the appropriate steps to help you with the bill prepayments and apply these as corrections. 

 

Need to reconcile your 2020 bank accounts? I'm sure this article can help you with the process: Reconcile an account in QuickBooks Desktop.

 

Don't forget to reply to this thread if you need more help recording your vendor transactions. I'll also help you out with any other processes or tasks in QuickBooks. I'll see you around real soon. 

View solution in original post

Hamza Dayr
Level 2

Prepayments beginning balance

Thank you James Paul

I m putting only 2021 transactions I can't enter 2020 transactions has been made but I need the capture 2020 prepayments 2021 statement.

 

 

 

 

ChristieAnn
QuickBooks Team

Prepayments beginning balance

Hi there, Hamza Dayr.

 

I appreciate you for coming back to the thread to add additional details about your concern.

 

Since your company starts using QuickBooks 2021 and the system is date-specific, you can only post transactions after the start date of the inventory item. The date in the inventory item is when you will start tracking quantity, which is why you can't create a transaction before the date entered. That said, I suggest find the inventory item so you can change the date to the previous date so you can start creating 2020 entries.

 

Here's how:

 

  1. Go to the Lists menu. Then, select Item List.
  2. Double-click the item you want to change.
  3. Enter your changes in the Edit Item window.
  4. Hit OK.

 

For additional information, you can click this article: Add, edit, and delete items.

 

Once done, start following the steps shared above so you're able to apply the prepayment.

 

Please refer to this article to see steps on how you can personalize a vendor report so that it will show what's your company stands, in terms of expenses and accounts payable: Customize vendor reports.

 

For other questions about this or if you need help with other things in QuickBooks, feel free to connect with me again. I'll be right here to help you anytime.

Hamza Dayr
Level 2

Prepayments beginning balance

Thank you for your assistance James Paul.

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