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Intuit
4 helpful votes

Write off customer and vendor balances

You may have small balances that are the result of an error, an overpayment, or an underpayment. Often it would cost more time and materials to collect or pay the amount due than it would be to clear it from your accounts.

We recommend two ways to remove the amounts. Make sure to consult your accounting professional before trying any of these options.

Option 1: Create a General Journal Entry to write off the amount

Accounts Receivable

  1. Create the appropriate journal entry.
    1. From the Company menu, select Make General Journal Entries.
    2. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.

      For customer with over payment

      1. Select the Account field and select Accounts Receivable from the drop down list.
      2. Enter the amount under Debit column, tab to the Name column and select a Customer Name from the drop down list.
      3. In the next line, select the offset account and enter the amount under Credit column.User-added image

      For customers with under payment

      1. Select the Account field and select Accounts Receivable.
      2. Enter the amount under Credit column, tab to the Name column and select a Customer Name from the drop down list.
      3. In the next line, select the offset account and enter the amount under Debit column.User-added image
    3. Select Save & Close.
  2. Apply the General Journal Entry to the Existing Credit/Debit.
    1. From the Customers menu, select Receive Payments.
    2. Enter the name of the customer in Received From field.
    3. Select the invoice and choose Discounts & Credits.
    4. Under Credits tab, select the available credit and click Done.
    5. Select Save & Close.

Accounts Payable

  1. Create the appropriate journal entry.
    1. From the Company menu, select Make General Journal Entries.
    2. In the Make General Journal Entries window, change the date and fill in the entry number if necessary.

      For vendor with over payment

      1. Select the Account field and select Accounts Payable from the drop down list.
      2. Enter the amount under Credit column, tab to Name column and select the vendor name from the drop down list.
      3. In the next line, select the offset account and enter the amount under Debit column.User-added image

      For vendor with underpayment

      1. Select the Account field and choose Accounts Payable from the drop down list.
      2. Enter the amount under Debit column, tab to Name column and select the vendor name from the drop down list.
      3. In the next line, select the offset account and enter the amount under Credit column.
      4. Select Save & Close.
  2. Apply the journal entry to the existing debit/credit.
    1. From the Vendors menu, select Pay Bills.
    2. Select the bill and choose Set Credits.
    3. Under Credits tab, select the available credit and click Done.
    4. Select Save & Close.

Option 2: Use Discounts to write off small amounts

  1. Create an account and item to use when writing off small amounts.
    1. Create a Charge off Account.
      1. From the Lists menu, choose Chart of Accounts.
      2. Select the Account button and choose New.
      3. Select Income then Continue.
      4. Enter Minor A/R and A/P Charge-Off in the Account Name field and select Save & Close.
    2. Create a Charge-off item.
      1. From the Lists menu, choose Item Lists.
      2. Select the Item button and choose New.
      3. Choose Other Charge as Item Type and click Continue.
      4. Enter Minor Charge-Off in the Item Name/Number field.
      5. Select Non-Taxable Sales in the Tax Code field.
      6. Select Minor A/R and A/P Charge-Off in the Account field.
      7. Select OK to save and create the item.
  2. Select the scenario that best describes the small amount that you want to clear.

    Customer underpayment

    1. From Customers menu, select Receive Payments.
    2. Choose the name of the customer in Receive From field.
    3. Select the invoice that you want to write off the amount.
    4. Select Discounts & Credits.
    5. Select the Discount tab:
      1. Enter the amount in Amount of Discount field.
      2. Select Minor A/R and A/P Charge-Off in the Discount Account field.
      3. Select Done to close the Discount and Credits window.User-added image
    6. Click Save & Close to close the Receive Payments window.

    Customer overpayment

    1. From the Customers menu, choose Create Invoices.
    2. Select the customer name in the Customer:Job field.
    3. Select Minor Charge-Off in the Item field and enter the amount of over payment.
    4. Select Apply Credits.User-added image
    5. Select the credit in the Available Credits section (The amount of credit should match the amount of invoice).User-added image
    6. Select Done to close the Apply Credits window.
    7. Select Save & Close to close the Create Invoice window.

    Vendor underpayment

    1. From the Vendors menu, select Pay Bills.
    2. Choose the bill that has the balance that you need to write off.
    3. Select Set Discount.User-added image
    4. Select the Discount tab
      1. Enter the amount in the Amount of Discount field.
      2. Select Minor A/R and A/P Charge-Off in the Discount Account field.User-added image
      3. Click Done to close Discount & Credits window.
    5. Select Pay Selected Bills to close the Pay Bills window.
    6. Select Done in Payment Summary window.

    Vendor overpayment

    1. Enter a Bill that will offset the credit.
      1. From the Vendors menu, choose Enter Bills.
      2. Select the vendor in the Vendor field.
      3. Under the Items tab, select Minor Charge-Off in the Item field.
      4. Select Save & CloseUser-added image
    2. Apply the available credit to the bill that you created.
      1. From Vendors menu, choose Pay Bills.
      2. Select the bill that you entered to offset the credit.
      3. Select Set Credits.
      4. Choose the Credits tab and select the credit.User-added image
      5. Select Done to close Discount & Credits window.
      6. Select Pay Selected Bills to close the Pay Bills window.
      7. Select Done in Payment Summary window.

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