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Txroofer
Level 2

Removing Old Vendor Invoices/Credit Memos

I have discovered some old vendor invoices and credit memos from prior years that I know have been paid and or used on the vendor side of the equation. The accountant prior to me did not keep track of what was paid and used very well at all. The result is I have many open invoices and credit memos from prior years in my QuickBooks that don't belong there.

 

I was thinking about creating one large credit memo to removed all the invoices at the same time. However because they are from prior years I am nervous if this would impact our prior years tax returns?  I know I don't want to delete or void them since they are from a prior year, so I am trying to figure out the best, cleanest way to handle them. 

 

As far as these old credit memos from prior years are concerned I really don't know what to do with them since I don't want to delete or void them either and mess up our prior years tax returns.  I guess I could create a fake vendor invoice in the amount of all these credit memos and apply them all to it?

 

Thanks for all your input!

9 Comments 9
MaryLurleenM
Moderator

Removing Old Vendor Invoices/Credit Memos

You'll want to write them off as bad debt, Txroofer.

 

Writing off a bad debt ensures your accounts receivable and net income stay up-to-date. This is when you're unable to collect the fees.

 

Let me show you how it works in QuickBooks Desktop:

 

Step 1: Add an expense account to track the bad debt

  1. Click Lists on the menu.
  2. Select Chart of Accounts.
  3. Select the Account menu and then New.
  4. Select Expense, then Continue.
  5. Enter an Account Name, for example, Bad Debt.
  6. Select Save and Close.

Step 2: Close out the unpaid invoices

  1. Click Customers menu.
  2. Select Receive Payments.
  3. Enter the name of the customer in the Received from field.
  4. For Payment amount, enter $0.00.
  5. Select Discounts and credits.
  6. In the Amount of Discount field, enter the amount you'd like to write off.
  7. For Discount Account, select the account you added in step 1, and select Done.
  8. Select Save and Close.

You'll want to run the  Accounts Receivable Aging Detail report after to check the customer's open balances.

 

Let me know if you need anything else.

Txroofer
Level 2

Removing Old Vendor Invoices/Credit Memos

I am talking about invoices from vendors not to customers. 

Txroofer
Level 2

Removing Old Vendor Invoices/Credit Memos

I am talking about invoices from vendors not invoices to customers.

Rubielyn_J
QuickBooks Team

Removing Old Vendor Invoices/Credit Memos

Hello there, @Txroofer.

 

I'm here to clear things out for you. We'll need to write off vendor balances. To do this we'll need to create an appropriate journal entry.

 

Here's how:

  1. Go to the Company menu.
  2. Choose Make General Journal Entries.
  3. In the Make General Journal Entries window, modify the date and input the entry number.

For vendor with an overpayment, I'll show you how:

  1. Choose the Account field and select Accounts Payable.
  2. Input the amount under the Credit column, and select the vendor name from the dropdown list.
  3. In the next line, choose the offset account and enter the amount under the Debit column.

On the other hand, for a vendor with underpayment, here's how:

  1. Click the Account field and choose Accounts Payable.
  2. Enter the amount under the Debit column, and select the vendor name from the dropdown list.
  3. In the next line, select the offset account and enter the amount under the Credit column.
  4. Once done click Save & Close.

After, we can now apply the journal entry to the existing debit/credit.

  1. From the Vendors menu, choose Pay Bills.
  2. Click the bill and select Set Credits.
  3. Under the Credits tab, choose the available credit and select Done.
  4. After click Save & Close.

Should you need to run some reports in QuickBooks Desktop, feel free to check out this article: Understand reports.

 

Let me know if you have any other clarifications. I'd be glad to assist you as soon as I can. Have a nice day.

Txroofer
Level 2

Removing Old Vendor Invoices/Credit Memos

I am working in QuickBooks Desktop and I am still struggling with this issue. The previous explanations are too vague. Here are the specifics for this one large vendor, lets call them ABC Co., who issues over a 1000 invoices to us each year. It is a very large account and challenging to keep track of all the details.

 

2018 - $24,904.01 on 4 ABC Co. vendor invoices showing open in QB but considered paid by ABC Co.

*2018 corporate taxes have been filed, 2018 is closed out

------------------------------------------------------------------------------------------------------------------------------------

2019 - $3081.49 in vendor invoices showing open in QB but considered paid by the vendors

$5937.54 in open credit memos as well for this same vendor

*2019 corporate taxes have been filed, 2019 closed out

 

I'm thinking I could apply the 2019 open credit memos to the 2019 open invoices and at least clear out those invoices, but that will still leave me with $2856.05 in invoices to clear out for 2019 for this vendor and I still don't understand how to handle the invoices from 2018 that are still open. 

 

My biggest concern is that I do not want my actions to impact previous tax returns that have already been filed.

 

Thank you for your continued support and patience with my questions!

 

 

 

Rasa-LilaM
QuickBooks Team

Removing Old Vendor Invoices/Credit Memos

Hello again, @Txroofer.

 

Thanks for adding more details about the issue. I personally want to make sure your previous years' balances are cleared out.


The resolution provided by my colleague should help fix the issue. Since your 2018 and 2019 books are already closed, I suggest consulting with an accountant for further assistance.


They can provide recommendations on how to close the open bills without throwing off your records. I can help find a search for one of our ProAdvisors’.

 

Here's how:

 

  1. Paste this link in your browser: Find an accountant.
  2. From there, enter your city or zip code in the Search field.
  3. This will open another page that shows a list of accountants near you.

For more insights about the steps provided by my peer, let me share the Write off customer and vendor balances article. It contains some screenshots to visually guide you as well as instructions on how to clear out small balances.


Additionally, the Instructions for Fixing Accounts Payable Errors in QuickBooks guide contains tips and steps on how to resolve outstanding bills.


Please know the Community has your back. If you need further assistance with QuickBooks, click the Reply button and post a comment. I’ll jump right back in to help. Have a good one. 

SusanSt
Level 1

Removing Old Vendor Invoices/Credit Memos

Hello, 

When I open my vendor center and view Vendors with Open Balances, I have a vendor that shows an open credit. The vendor does not really have an open credit. This transaction is from 2010. The bill was posted to account-AP and the Spit account used was AP, (should have been office supplies). The Bill Pmt-Check was posted to BCB Checking and A/P. Any way I try to correct it I either get a open balance to the Vendor or A/P. What would be the correct journal entry to remove the balance but not effect those two accounts?

Thank you! 

 

dacia
Level 2

Removing Old Vendor Invoices/Credit Memos

I know this question is old, but perhaps I can provide a different scenario.  Back when I didn't realize what I was doing, I deleted vendor invoices that had payments already applied against that invoice.  QB doesn't understand when you do this, so guess what happens?  It is no longer applied as an expense, but it remains as a "floating credit" against your accounts payable.  So let's say your A/P on your balance sheet says your balance is $35,000.  Your "vendor bill" section says $40,000. But then you see on your Vendors List under "vendor center" a negative balance from a vendor for $5,000 from 3 years ago (let's say).  Well, it's negative 5,000 because you know for a fact you paid that vendor 3 years ago. When you click on that vendor info to see why the balance is (5,000) you realize that it has a "Bill Pmt" but there is NO BILL to offset that payment because it was DELETED.  You have to re-create that bill for whatever current tax year you are in, because you never actually expensed it the year you were supposed to!  And you can't create the bill for the year it actually belonged because it's too late, the taxes were already done and it wasn't actually accounted for.  

 

Create a Journal Entry for the current tax year, DEBIT the amount of the credit for whatever the expense was supposed to be,  then on the credit side, you will choose "Accounts Payable" and then make sure you apply it against the vendor it originally belonged to. Finally, you will go back to VENDOR PAY BILLS, now you will see the bill from the JE you just made, and you will "apply the credit" that had been floating.  Now that floating credit/negative balance will be gone and that reduces your income for the current year since you never actually used it the previous year.  

 

If you still see a difference with the balance sheet AP balance and the Vendor Bill Section, run a report on the AP in the balance sheet section for ALL dates and sort by VENDOR.  If you see vendors with negative balances, there is another solution to Re-create or create invoices for Payments previously made to those vendors.  

Attorney/Accountant for 15 years, using QB for 15 years.  Hope this helps and makes sense! PS: I use the accrual method. 

dacia
Level 2

Removing Old Vendor Invoices/Credit Memos

Please read my post that I just made to the original question on this thread! It may help you. 

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