Customer Paid the wrong QBs company

krauseba29 · ‎July 16, 2024

We have 2 separate and distinct QBs companies setup and with different chart of accounts, etc. We have a customer that owed monies to both of our companies, but when they paid they made one payment to Company A for $400 when in actuality they only owed Company A $300 and Company B $100. This customer does not and will not have any future invoices to apply the $100 overpayment on Company A to. To make this a little bit more complicated, a physical check was cut from Company A to Company B to essentially reimburse Company B for what was owed to them so that the open customer invoice could be cleared.

My question is, how do we properly record the original customer payment of $400 on the books for Company A since we don't want a credit on account for this customer, nor do we want to refund the customer the $100? We're struggling with how to show the deposit on the books for Company A so that we can successfully reconcile the bank account.

Rainflurry · ‎July 17, 2024

@krauseba29

The advice from @SheandL doesn't help much since they glossed over the important part - the journal entry.

In this case, you don't need to use a journal entry. On the $400 payment received from your customer, assign $300 to A/R and $100 to the bank Clearing Account (set one up if you don't have one). Then, apply the $300 to the invoice from Co. A. Next, issue payment to Co. B and assign the bank Clearing Account to the payment. That's all you need to do in Co. A. In Co. B, receive the $100 payment from Co. A and apply it to the invoice as though it was being received from your customer.

View solution in original post

SheandL · ‎July 16, 2024

Hi there, @krauseba29. We can create a clearing account and journal entry to help accurately record the payments without any discrepancies. Let me guide you on how.

The clearing account is used as a temporary holding account to record transactions involving transfers between Company A and Company B. Its purpose is to ensure that $100 is transferred from Company A to Company B without directly affecting customer balances. Here's how to create one:

Open your QuickBooks Online (QBO).
Go to the Gear icon, then select Chart of Accounts.
Click the New button in the top right corner of the Chart of Accounts page.
In the Account name field type "Clearing Account", then select Bank from the Account type dropdown and choose the appropriate Detail type.
Hit Save.

Since you don't wish to reimburse the overpayment, you can create a journal entry to reallocate funds within Company A’s accounts to reflect the transaction accurately and manage the $100 appropriately. To create one, here's how

Go to + New.
Select Journal entry.
Add the necessary information. Ensure that the details entered are correct.
Click Save and close.

Moreover, I suggest you collaborate with your account so that they can help you accurately record and choose what accounts will be used when doing this process.

See this article for reference: Create journal entries in QuickBooks Online.

By following this, you can ensure that you can reconcile your bank account successfully. If you need guidance on doing so, here's an article that can guide you: Reconcile an account in QuickBooks Online

You can get back to this post if you have further questions about handling an overpayment in QBO, feel free to reply to this post. I'll make sure to help you out anytime.

Rainflurry · ‎July 17, 2024

@krauseba29

The advice from @SheandL doesn't help much since they glossed over the important part - the journal entry.

In this case, you don't need to use a journal entry. On the $400 payment received from your customer, assign $300 to A/R and $100 to the bank Clearing Account (set one up if you don't have one). Then, apply the $300 to the invoice from Co. A. Next, issue payment to Co. B and assign the bank Clearing Account to the payment. That's all you need to do in Co. A. In Co. B, receive the $100 payment from Co. A and apply it to the invoice as though it was being received from your customer.

krauseba29 · ‎July 21, 2024

Thanks so much for helping close the loop on what the specifics of the journal entry should be (after setting up the clearing account) as that is the part I was struggling with. Much appreciated!

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Customer Paid the wrong QBs company