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Level 1

Applying vendor credit to correct expense account

When I apply a credit memo to a vendor bill, it doesn't hit the correct expense account even though I have coded it as such.  For example,  I enter a vendor credit memo and choose the expense account for Vehicles, but the bill that it is applied to was coded to Buildings expense.  The credit reduces Buildings expense rather than Vehicles expense, causing my P&L Statement to be off by that amount in each account.    Is there a way to work around this or do I need to create a journal entry to fix it each time?

1 Comment

Applying vendor credit to correct expense account

It's nice to see you here, @db2828,


I've tried the steps you've mentioned and got the correct posting on the Profit and Loss report. I will share the steps below so you can try it on your company file.


Step 1: Create the bill for the Building Expense. It should look like this:


Step 2: Create the vendor credit for vehicles.


Step 3: Apply the credit as payment on the bill.


  1. Open the bill and choose Pay Bill.
  2. On the payment window, pick Set Credits.
  3. Choose the credit from the Discount and Credits window.
  4. Press Done.
  5. Hit Pay Selected Bills.

On the Profit & Loss report, the credit will reduce Vehicles expense. See this:

To show you the detail of the transactions, see them here:


Transaction List for Vehicles Expense (Credit)


Transaction List under Building Expense (Bill)


Let me know how it goes for you. I'll be right here if you have any other questions with QuickBooks. Have a nice day!

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