Transfer AR Balance to Open AP Invoice

hdaccounting · ‎May 21, 2020

Greetings! I have a customer with an open balance, the same customer is also a vendor that I have an open invoice for. How would I receive a partial payment and clear the open AP invoice at the same time? IE: The customer owes 5,000.00 I owe the vendor 2,500.00. The customer paid 2,500.00. I'm assuming this is done through a clearing account, I'm just not sure what the adjustment would be. Thank you!

JoesemM · ‎May 21, 2020

Good day, @hdaccounting.

Yes, you can set up a Clearing account if you haven't set up one in QuickBooks Desktop (QBDT). After setting up a clearing account, you need to deposit the payment under the account created (clearing account), then pay the bill using the clearing account.

Go to Lists at the top menu bar.
Choose Chart of Accounts.
In the Add New Account window, select the Bank radio button.
Click Continue.
In the Account Name field, enter Clearing Account, Barter Account, or Wash Account.
Do not enter an opening balance.
Hit Save & Close.

To use a clearing account:

Create a journal entry.
Select the A/R account from which you're moving the money.
Add the clearing account and its details.
Click Save.
Create a second journal entry.
Add the clearing and the second A/R account.
Add any other details and click Save.
Link the journal entries together through the Receive Payment or Pay Bills window.

More details about using a clearing account are discussed here: Set Up A Clearing Account.

Also, I'd recommend consulting your accountant to make sure your books are accurate.

In case you want to know some "How do I" steps in QuickBooks Desktop, you can always visit our Help Articles page for reference.

Feel free to post back here in the Community, if you need anything else. I'm always here to lend a hand. Keep safe.

View solution in original post

JoesemM · ‎May 21, 2020

Good day, @hdaccounting.

Yes, you can set up a Clearing account if you haven't set up one in QuickBooks Desktop (QBDT). After setting up a clearing account, you need to deposit the payment under the account created (clearing account), then pay the bill using the clearing account.

Go to Lists at the top menu bar.
Choose Chart of Accounts.
In the Add New Account window, select the Bank radio button.
Click Continue.
In the Account Name field, enter Clearing Account, Barter Account, or Wash Account.
Do not enter an opening balance.
Hit Save & Close.

To use a clearing account:

Create a journal entry.
Select the A/R account from which you're moving the money.
Add the clearing account and its details.
Click Save.
Create a second journal entry.
Add the clearing and the second A/R account.
Add any other details and click Save.
Link the journal entries together through the Receive Payment or Pay Bills window.

More details about using a clearing account are discussed here: Set Up A Clearing Account.

Also, I'd recommend consulting your accountant to make sure your books are accurate.

In case you want to know some "How do I" steps in QuickBooks Desktop, you can always visit our Help Articles page for reference.

Feel free to post back here in the Community, if you need anything else. I'm always here to lend a hand. Keep safe.

VIkki55 · ‎July 22, 2020

Joesem.... Could you please share what the JE's , posting steps to AR & AP etc would look like ( complete process ) ... I also have a Customer and Vendor we are doing an offset between AR & AP but then the Cust/Vendor sends us a "difference" check for balance due in either AR or AP... My clearing account zero's out but the AR or the AP is not reflecting the correct balances... I must be missing a step or something... Your help would be greatly appreciated... Thank you

GraceC · ‎July 22, 2020

Hello there, @VIkki55.

You can enter those transactions as a barter method. This is used when you and your vendor exchange goods and services. I'll guide you with the steps.

To set up a barter bank account:

Click List at the top menu bar, then choose Chart of Accounts.
Press CTRL+N on your keyboard to create a new account.
Choose Bank and hit Continue.
You can enter Barter Account as the name and click Save.

To create an invoice for the barter transaction:

Click Customers at the top menu bar and select Create Invoice.
Fill out the invoice as you normally would and then Save it.
Click Customers at the top menu bar and select Receive Payments.
Choose the barter Customer.
From the Payment Method drop-down menu, select Add New and then enter "Barter" in the name field.
Choose Save.
Select Deposit To: choose the barter bank account.
Hit Save.

To enter a bill for a barter transaction:

Click Vendors at the top menu bar and select Enter Bills.
Fill out the bill as you normally would and then Save it.
Click Vendors at the top menu bar and select Pay Bills.
From the Payment Account drop-down menu, select the barter bank account.
Select the bill you want to pay
Enter the amount of the bill payment and then hit Save.

By following these steps, you'll be able to record your payment as a barter transaction.

Furthermore, here's an article you can read for more details: Set up a clearing account.account.

As always, we recommend consulting with your accountant on the best way to handle this.

Feel free to reach out to us. While we can't provide accounting advice, we want to make sure any technical questions you have about the system are answered.

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Transfer AR Balance to Open AP Invoice