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dranta
Level 1

Vendor deposit and applying to bills

I have a messy situation.  We just started the company and didn't have our bank set up or vendor account terms but needed heating oil.  So our CEO prepaid $4500 from his personal account so they would deliver.  Then we also paid an additional $2500 to the vendor directly when we received our checks and we paid the CEO back for the $4500.  We have 4 separate invoices to post against these deposits and will have a remaining credit which I would like it to show up on their account.  I see that you are to post deposits in the accounts payable category then enter a bill in when we receive invoices with the category for, in this case, fuel oil.  How do I handle this when one of the payments was not made directly to the vendor that I want to show all of the credits and debits?  Thanks!!

Solved
Best answer February 03, 2023

Best Answers
Rainflurry
Level 13

Vendor deposit and applying to bills

@dranta 

 

To properly record the heating oil expense paid for by the CEO and the subsequent reimbursement, first, create a bank account in QBO called 'Clearing Account'.  Then, create a bill from your vendor for $4,500 for the heating oil and pay it using the Clearing Account.  Then, create a journal entry to move the amount from the Clearing Account to a loan to pay the CEO - debit the Clearing Account and credit a Loan Payable.  Then, issue payment to the CEO and assign the Loan Payable account to the payment.  

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10 Comments 10
Nicole_N
QuickBooks Team

Vendor deposit and applying to bills

Hi there, @dranta. I've got some information you need in handling payments to vendors in QuickBooks Online (QBO). 

 

When making payments to the vendor, you'll have to use Accounts Payable as the expense (reason) for the payment. That will set a vendor credit that you can apply to the bill when it comes in, and pay the balance due. So to record the payment, you'll have first to create a new expense under that vendor. 

Here's how:
 

  1. In the left menu, click the + New button.
  2. Select Expense.
  3. Choose the Payee name and Payment account.
  4. Go to the Category details section.
  5. Under the Category column, select Accounts Payable (A/P).
  6. Enter the description and the amount.
  7. Click Save and close.

 

Then, enter the bill when it arrives and apply the prepayment. See this link for more information: Enter bills and record bill payments in QuickBooks Online.

 

I see that one of the payments was not made directly to the vendor. Can you tell me more about it? Did you pay your vendor manually? This way, I'd be able to give you an accurate resolution on how to handle this.

 

 I've also included these references that help you manage your expenses and vendors: 
 

The Community is always here if you have additional questions about vendor deposits in QuickBooks Online. Have a great day!

dranta
Level 1

Vendor deposit and applying to bills

Thank you.  Yes I was able to do as you mentioned but the problem is that one of the payments made was to our CEO as we did not have an account set up yet.  So now I paid our CEO $4500 to repay him for this expense but I would like it to show up on our vendor account because we will still have a credit after all is said and done.  Can I do this by a journal entry?

Adrian_A
Moderator

Vendor deposit and applying to bills

I appreciate you for getting back to us, dranta.

 

Yes, you can create a journal entry to transfer between funds. However, to ensure that the transactions are recorded correctly, I'd suggest reaching out to your accountant. They're the best support that can guide you with the process.

 

I've added this reference as your guide in creating a journal entry: Create journal entries.

 

I'm just a post-away whenever you have concerns with QuickBooks.

lambdawinner
Level 1

Vendor deposit and applying to bills

Oh no, this is a huge amount of money. Really hoping this type of problem does not occur to you ever again.

Rainflurry
Level 13

Vendor deposit and applying to bills

@dranta 

 

To properly record the heating oil expense paid for by the CEO and the subsequent reimbursement, first, create a bank account in QBO called 'Clearing Account'.  Then, create a bill from your vendor for $4,500 for the heating oil and pay it using the Clearing Account.  Then, create a journal entry to move the amount from the Clearing Account to a loan to pay the CEO - debit the Clearing Account and credit a Loan Payable.  Then, issue payment to the CEO and assign the Loan Payable account to the payment.  

dranta
Level 1

Vendor deposit and applying to bills

Thank you!!!!  That is the answer I needed.  I appreciate it!

whatever12345
Level 1

Vendor deposit and applying to bills

We made vendor deposits and posted to asset account in March.  Now in April I have the invoices posted that I want to apply this deposit to.  When I apply the deposit to the invoices the original entry to the asset acct is now gone and that doesn't work seeing it changes a closed month.  There has to be a work around.  I would think the asset account should show the dep in March and it moving out in April.  I dont want my March bal sht to change.  Help pls.

Carneil_C
QuickBooks Team

Vendor deposit and applying to bills

Hello there. 

 

I'm glad you joined this thread and shared the details of your concern with posting your transactions. I've got some insights that can help you sort this out. 

 

We can create a vendor credit with the same amount of the vendor deposit posted to your asset account, but since you mentioned that your books for March are closed, we can use the Journal Entry. Once ready, here's how:

 

  1. Click + New and select Journal entry.
  2. On the first line, select an account from the Account field. It depends if you need to debit or credit the account. Enter the amount in the correct column.
  3. On the following line, select the other account you're moving money to or from. It depends if you entered a debit or credit on the first line. Enter the same amount in the opposite column.
  4. Review the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. It means the accounts are in balance.
  5. Enter information in the memo to know why you made the journal entry.
  6. Hit Save and new or Save and close.

 

However, this process is a bit tricky. We'll want to seek an accountant's advice to ensure the accuracy of your books. 

 

Here's an article you can visit to learn more about recording journal entries: Create journal entries in QuickBooks Online.

 

If you need help closing out your books after making the corrections, I'll add this article: Reconcile an account in QuickBooks Online

 

Let me know how else I can help you balance your accounts or transactions. I'll be around to help you.

whatever12345
Level 1

Vendor deposit and applying to bills

Not sure you understood the question.  I figured out that I need to create a vendor credit for the same amount of the deposit that was posted to the Other Asset acct in prior month.  Post this credit to this account also.  Then go to vendor, make payment and apply the credit to invoices.  I wouldn't want to create JE's for this.  

ChristieAnn
QuickBooks Team

Vendor deposit and applying to bills

Hi there, whatever12345.

 

I appreciate you for coming back to the thread and for sharing some information on how to fix your deposit issue and post it to a particular account. I'm also glad to know that the issue has been resolved as a result of the procedures you performed.

 

Please know that you are always welcome to click the Reply button below if you still have concerns about managing entries in QBO. I'm always around to help, whatever12345.

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