How to apply customer invoice to their liability

Solar Bozo · ‎December 02, 2020

Hello. I'd like help in how to record applying a customer invoice amount to a loan they made to us previously, without exchanging payments by check.

RE: Quickbooks Premier 2018 and a nonprofit (but not 501c-3) organization.

I'm an amateur Quickbooks bookkeeper, and have never dealt with this sort of thing before. I'm volunteer treasurer for our rural Road Maintenance Association. All our 23 "customers" are residents on our non-county road, and they pay $300 dues per year.

We have a several thousand dollar loan from one of our resident customers, set up as type "Other Current Liability" in QB. I want to apply this customer's upcoming dues (not yet invoiced) to the loan liability so that the customer doesn't have to write a dues check, yet the fact that he paid dues shows up in QB and his loan amount is reduced by the amount of the dues.

This is a newly set up company in QB, so I don't have a problem with making structural changes, if that's what it takes to do this right.

IamjuViel · ‎December 02, 2020

Hello there, @Solar Bozo.

Let me share additional information to help you tracked your customer's invoices and loans.

If your customer's loan is already recorded in QuickBooks and it is showing a liability balance, you can create a Journal Entry. Just make sure to use the Account Receivables account and Liability account. This will decrease the customer's payable and lower the liability.

Here's how to create a journal entry:

Go to the Company menu.
Choose Make Journal Entries.
Enter the transaction details.
Click Save and Close.

Also, I'd recommend consulting with an accountant so you'd guided accurately in choosing the right account.

Don't hesitate to leave a comment below if you have other questions about tracking your customer-related transactions. I'm just a few clicks away.

View solution in original post

JoesemM · ‎December 02, 2020

Welcome to the Community space, @Solar Bozo.

You can create a new account called Other Currents Asset in the Chart of Accounts. This way, you can track the loan and its repayment without exchanging it by check. Let me guide you how:

Go to the Lists menu and click Chart of Accounts.
Click Account at the bottom of the list and then click New.
Under Other Account Types choose Other Current Asset and then click Continue.
If you are using account numbers, enter the number in the Numbers field.
In the Account Name field, enter Employee Advances.
Click Save & Close.

Once done, create a journal entry to apply the credit to the open invoice. Here's how:

Go to the Company menu and select Make General Journal Entries.
Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
Click Save or Save & Close.

For more details, see this article: Create a journal entry in QuickBooks Desktop for Windows or Mac

Upon sharing this suggestion, I'd recommend consulting your accountant first. This is to make sure that your books are accurate.

To learn more about how Chart of accounts works in QBDT, you may find this article interesting: Understand the chart of accounts in QuickBooks.

If you have additional questions, feel free to leave a message in the comment section. I'll be happier to help. Take care and have a great day!

Solar Bozo · ‎December 02, 2020

Thanks so much for the reply. I wish it made more sense to me. The first thing that didn't make sense is this is a loan to us, not from us. So it is a liability and not an an "Other Current Assets."

IamjuViel · ‎December 02, 2020

Hello there, @Solar Bozo.

Let me share additional information to help you tracked your customer's invoices and loans.

If your customer's loan is already recorded in QuickBooks and it is showing a liability balance, you can create a Journal Entry. Just make sure to use the Account Receivables account and Liability account. This will decrease the customer's payable and lower the liability.

Here's how to create a journal entry:

Go to the Company menu.
Choose Make Journal Entries.
Enter the transaction details.
Click Save and Close.

Also, I'd recommend consulting with an accountant so you'd guided accurately in choosing the right account.

Don't hesitate to leave a comment below if you have other questions about tracking your customer-related transactions. I'm just a few clicks away.

Topics

Training

Community

Resources

How to apply customer invoice to their liability