Pre-paid long lead time orders

Hi there, @Need2Learn. I've got all the instructions you'll need on how to record your prepaid expenses.

You can use the Check to Accounts Payable method in recording your prepaid expenses with vendors. With this method, you'll use Checks or Expenses. Then, select the Accounts Payable in the Category field. This will show a negative vendor balance to reflect that they owe you until you receive the items.

Here's how:

1. Select +New and choose Checks or Expenses.
2. Select the vendor's name.
3. In the Payment account field, select the account you used to pay for the expense.
4. In the Payment date field, enter the date for the expense.
5. Fill in the necessary information.
6. In the Category details section, select Accounts Payable in the Category dropdown.
7. Enter the amount.
8. When you're done, select Save and close.

Once you received the items, copy the purchase order to the bill. Here's how:

1. Select +New and choose Bill.
2. Select the vendor's name. This opens a window with their open purchase orders.
3. Select Add for the correct purchase order. They appear in the Item details section.
4. Adjust the quantity or amount for each line item to reflect the portion you received or plan to pay for.
5. Select Save and close.

The last step is to apply the Accounts Payable check to the bill you entered. Follow these steps:

1. Select +New and choose Pay Bills.
2. Select a bill for your vendor from the list. You'll see the available credit with this vendor in the Credit Applied field.
   
3. Select Save and close.

You can also check out this article on how to record vendor credits: Handle vendor credits and refunds.

I'm just a post away if you need further assistance with entering your prepayments. Have a great day.

This is where you lost me:

Once you received the items, copy the purchase order to the bill. Here's how:

1. Select +New and choose Bill.
2. Select the vendor's name. This opens a window with their open purchase orders.
3. Select Add for the correct purchase order. They appear in the Item details section.
4. Adjust the quantity or amount for each line item to reflect the portion you received or plan to pay for.
5. Select Save and close.

#4 you say 'adjust the quantity or amount for each line item to reflect the portion you received or plan to pay for... when you create a bill, it closes out the purchase order and marks the items as received right? The issue is I pay for the inventory that I have yet to receive, so by creating this bill, its going to mark it as paid but its going to also close out the PO and mark the inventory as received, right? 

Also, what is the proper way to record the account paid from if I paid using my paypal account but my paypal account bills my credit card?

Hello Need2Learn!

Let me further assist you in recording prepaid inventory.

You're correct. When you create a bill from the PO, it closes the PO and mark the items as received. However, you only need to create a bill if you physically received the items.

We create a check or expense transaction to record the payment. Then, we can apply it as a payment to close a bill once you converted the PO.

I suggest you check this link for the detailed steps on how to track the items that you’ve paid but haven't received yet: How to track your prepaid inventory

I added this link if you need help in running, customizing, and saving a report: Run reports in QuickBooks Online.

Don't hesitate to post again if you have more questions. I'm looking forward to assisting you again.