Transfer and apply credit from one vendor to another in QuickBooks Desktop

In QuickBooks Desktop, you can transfer available credits from one vendor to another through the use of a temporary clearing account. Learn how to accomplish this task by following the steps below.

Step 1: Set up a clearing account

The clearing account is for moving the existing credit from the vendor.

1. Go to the Lists menu, then select Chart of Accounts.
2. Right-click anywhere in the Chart of Accounts then choose New.
3. Once you are in the Add New Account window, choose Bank then select Continue.
4. In the Account Name field, you can put in Clearing Account, Barter Account, or Wash Account.
5. Leave the Opening Balance field blank, then select Save & Close

For a more detailed guide in creating clearing accounts, see Set up a clearing account.

Step 2: Create a Journal Entry to move the credit from the existing vendor to the clearing account

1. Go to the Company menu, then select Make General Journal Entries.
2. On the first line, credit Accounts Payable with the amount to be transferred. In the Name column, select the vendor from whom the credit is coming.
3. On the second line, debit the Clearing account created in step 1 with the same amount.
4. Select Save & Close.

Step 3: Apply the credit to the Journal Entry created as an unpaid bill

1. Go to the Vendors menu, then select Pay Bills.
2. Select the bill created by the Journal Entry (it will appear without a due date).
3. Select Set Credits.
4. Go to the Credits tab then select the credit. Select Done.
5. Select Pay Selected Bills.

Step 4: Create a Journal Entry to move the credit from the clearing account to the vendor

1. Go to the Company menu, then select Make General Journal Entries.
2. On the first line, debit Accounts Payable with the amount to be transferred. In the Name column, select the vendor who will receive the credit.
3. On the second line, credit the Clearing account with the same amount.
4. Select Save & Close.

The credit appears on the vendor's account and can be applied to outstanding bills in the Pay Bills window.