We use Desktop Enterprise.
We send 50% as a deposit with our Purchase Orders for inventory. How can I set up a fake bank account that I can transfer (but have actually writen a check to the vendor) theese deposits so when the bills come I can pull from the deposit (50%) and then pay the balance out of our real bank account.
When i do an asset account, and I write the check, it shows as a negative number. I want it to show as a positive number. Example
PO XYXY total of the PO is 1000.00. I write a check for 50% deposit ($500). When I get the inventory I want to apply the 50% of the pre-paid deposit plus pay the balance.
Using the accounts payable method, creates a negative number on the P&L, and we dont want that.
@Linkasink Should be as simple as using a Current Asset as the detail line on the 50% deposit check you are creating for the Vendor.
Per your example, this will cause $500.00 to move from the relevant bank account to the asset.
When you go to pay the remainder of the bill to the customer, create another check, but use -$500.00 on a detail line for the current asset.
This will allow you to then enter the full $1,000 on a second detail line for whichever account you're using to track inventory, reducing the amount coming out of your bank account for the second check to $500.
Total of $1,000 comes out of the checking account, $500 of which was briefly tied up in a current asset. Current asset gets lowered to $0, and you end up with the $1,000 in inventory.
Correcting this: "When you go to pay the remainder of the bill to the customer,..."
Customer should read vendor.
I should be hibernating.
Hello there, @Linkasink! It sounds like you're looking for the best way to track those 50% deposits on your purchase orders in QuickBooks Desktop Enterprise. I understand you want to keep track of these payments without affecting your P&L, and that using a standard asset account isn't giving you the desired result with the negative balance.
You're right, using a typical asset account for this will show a negative balance since you're reducing the account balance with the check. Let's explore a better way to handle this in QuickBooks:
Option 1: Liability Account for Deposits
Instead of an asset account, consider using a liability account specifically for tracking these deposits. Here's how it works:
This method accurately reflects that you've made a deposit and have a credit with the vendor, without affecting your P&L until the actual expense is incurred.
Option 2: Other Current Asset" with a Journal Entry
If you prefer to keep track of the deposit as an asset, you can still use an "Other Current Asset" account, but with an extra step:
This method might seem a bit more complex due to the journal entry, but it allows you to track the deposit as a positive asset while still accurately reflecting your finances.
Important Note: It's always a good idea to consult with your accountant to determine the best approach for your specific accounting needs and ensure it aligns with your preferred reporting methods.
I'm here to help you with any further questions or guide you through setting up these options in QuickBooks. Just let me know!
@MirriamM "Record the deposit: When you make the 50% deposit, use this liability account when writing the check. This will increase the liability account balance, reflecting the money you owe to the vendor."
A liability is an amount you owe to someone else.
A deposit is an amount you are paying to somebody else ahead of time.
In what world would paying somebody money increase the amount of money you owe them?
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