Vendor Prepayment

BBWire · ‎September 22, 2021

We have a vendor that we prepay so they can purchase materials to build our product. I have a situation where we prepaid the vendor in May of 2020. Since then we have several bills from them that I have applied this payment to. Only parts of these bills are paid with the prepayment and the rest is covered by check. In March of 2021 I applied this payment to a bill. Let's say I have prepaid the vendor $1,000 and the bill was $700 and I paid the whole $700 with the prepayment. This brings the prepayment balance down to $300. Now I am finding out this was incorrect, and I was only supposed to apply $300 from the prepayment and the balance of $400 by check. Because this was a prepayment and I paid this bill by going to Pay Bills and Set Credits, I cannot unapply the payment from the bill. Does anyone know how to do this so that I show the $400 portion of the bill still open and the prepayment amount open for $700 ? We use Desktop Enterprise.

Rose-A · ‎September 22, 2021

Thanks for checking in with us, BBWire. Let me help you sort this out.

To ensure you can apply the $300 prepayment, I'd suggest deleting and re-creating the transactions (bill and bill payment check).

To delete them, just open the transaction and click Delete.

After that, enter a bill amounting to $700 and Save the transaction.

Once saved, let's apply the $300 prepayment. Here's how:

Click Vendors at the top menu bar and select Pay Bills.
Choose the bill and click Set Credits.
Under the AMT. TO USE column, enter 300, and click Done.
This will show the $300 prepayment, your available credits are $700 and the bill is open with a $400 balance due.
Hit Pay Selected Bills.

To know more about vendor prepayments, check out this article: Record vendor prepayments or deposits for prepaid parts or services. This will provide you ways on how to enter prepayments as well as steps to view them in QuickBooks Desktop.

If you have additional questions, you're always welcome to drop a comment below. I'll be around to help. Have a good one!

View solution in original post

Rose-A · ‎September 22, 2021

Thanks for checking in with us, BBWire. Let me help you sort this out.

To ensure you can apply the $300 prepayment, I'd suggest deleting and re-creating the transactions (bill and bill payment check).

To delete them, just open the transaction and click Delete.

After that, enter a bill amounting to $700 and Save the transaction.

Once saved, let's apply the $300 prepayment. Here's how:

Click Vendors at the top menu bar and select Pay Bills.
Choose the bill and click Set Credits.
Under the AMT. TO USE column, enter 300, and click Done.
This will show the $300 prepayment, your available credits are $700 and the bill is open with a $400 balance due.
Hit Pay Selected Bills.

To know more about vendor prepayments, check out this article: Record vendor prepayments or deposits for prepaid parts or services. This will provide you ways on how to enter prepayments as well as steps to view them in QuickBooks Desktop.

If you have additional questions, you're always welcome to drop a comment below. I'll be around to help. Have a good one!

BBWire · ‎September 22, 2021

Thank you for your help!

khurrum.waheed@m · ‎October 28, 2023

Please advise that when this payment is made (i am using the same practice on QBO) PnL Statement shows Unapplied payments at the end with the complete prepayment amount and the bills charged in full against their related account. This means that the statement at Gross Profit level shows the actual profit where the last line of the report Net Income shows the amount deducted twice (once against the actual bill in the actual account as COGS and then again as unapplied payment (Expense).

Please refer to the image. Accounts in question (S)Sariya and Unapplied cash payment

Carneil_C · ‎October 28, 2023

Hello there, @khurrum.waheed.

I’ve seen that you’ve posted twice on the Community page. My colleague already addressed this issue with the vendor prepayments. You can visit the link to view her recommendation: https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/prepayments/01/1335569#M198...

Please don’t hesitate to get back to us if you have any other questions or concerns with QuickBooks Online tasks. We’re always here to help. Keep safe.

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