Applying a reconciled check to a bill.

Rachel_S · ‎December 04, 2024

I recently started working for a foundation that gives grants to local nonprofits.

When we award a grant, we set up an A/P account for the grantee and also create them as a vendor in Quickbooks Online. We then do a journal entry that credits the A/P account and debits an expense to the vendor, like this:

Journal Entry
Grants Payable: FA24-27 An Awesome Agency Account: Credit 10,000
Grants Expense: FA24-27 An Awesome Agency Vendor: Debit: 10,000

When we issue checks to the Grantees, we've been categorizing the payment under the AP account.

This clears the A/P account so that it shows a zero balance.

However, it leaves the Vendor with an unpaid bill.

I've found the simple solution to this is to apply the check payment to the open bills created through the journal entry while I'm writing checks. I will do that going forward.

Now I'm wondering about how to go back and clear out the years and years of unpaid bills that have accumulated up to this point.

Thoughts about how to clean up this mess? I was hoping to be able to tie the checks to the bills after they've been written and reconciled (I don't want to undo reconciliations from years ago!), but I'm not seeing a way to do that.

Rainflurry · ‎December 06, 2024

@Rachel_S

"The "Credit Applied" shown for each account is either 0.00 (if I've already made payment) or "Not available" (if I haven't)"

If you're showing $0.00 under "CREDIT APPLIED', then click on that to bring up the available credit (screenshot). Enter the credit in the box to apply it.

View solution in original post

Anonymous · ‎December 04, 2024

I appreciate you laying out the details of your concern, Rachel_S. I'm here to drop some information on how you can clean up the accumulated unpaid bills in QuickBooks Online (QBO).

You can undo the bill payment transaction to maintain accurate and up-to-date records, which is essential for effective financial management and reporting in QBO.

Sign in to your QuickBooks Payments account.
From the Processing Tools drop-down, select Reverse a Transaction.
Fill out the necessary fields and select Search.
Select the transaction(s) you want to refund, then Submit.

The next step involves connecting the various bills that you have and can conveniently pay through the Paybills service, ensuring that all your payment options are readily accessible in one streamlined platform.

I'll add a bunch of these helpful articles in case you need help with reconciliation and making some adjustments:

Drop by and ask away if you have more concerns about your entries in QuickBooks. If you'd like some assistance pulling up reports or managing sales records, do let me know and I'll assist you again.

Rainflurry · ‎December 05, 2024

@Rachel_S

The advice given by @Anonymous must be AI-generated. There's no reason to sign in to your QB Payments account.

To clear the unpaid bills, go to New > Pay bills. The journal entries (JE) that credited A/P should be listed and there should be a corresponding credit created by the checks that debited A/P. Apply the credits to the bills and you're all set.

In the future, it's best to enter a Bill instead of a JE when you award a grant. A Bill debits whatever account you choose under 'Category' and credits A/P for the total. Any time there's a form (Bill, Expense, Invoice, etc.) that can be used in place of a JE, it's best to use it. QB doesn't handle JEs well. They often don't show on reports and bypass cash vs. accrual accounting.

Rachel_S · ‎December 05, 2024

I agree that the first response was. . . not really at all related to my question. THANK YOU for your much more coherent support!

When I go to "Pay Bills", I'm only seeing my A/P accounts with an open balance listed. The "Credit Applied" shown for each account is either 0.00 (if I've already made payment) or "Not available" (if I haven't)

If I type an amount into the "Credit Applied," the only option I have is to "Schedule Payment." I don't want to make another payment . . . I just want to connect it to an old payment. I even experimented with the "Schedule Payment" option, but all I get is, "Online payments aren't available for paying for journal entries."

....And yes, I can see that entering a new grant as a bill would be the better way to proceed from here on out!! I will try that out in our Spring granting session.

Thanks again for your help!

Rainflurry · ‎December 06, 2024

@Rachel_S

"The "Credit Applied" shown for each account is either 0.00 (if I've already made payment) or "Not available" (if I haven't)"

If you're showing $0.00 under "CREDIT APPLIED', then click on that to bring up the available credit (screenshot). Enter the credit in the box to apply it.

Rachel_S · ‎December 09, 2024

This worked! Hallelujah amen! Thanks so much!!

Topics

Training

Community

Resources

Applying a reconciled check to a bill.