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D
Don Romaniello
January 9, 2019
Question

Cleaning up Accoumts P{ayable

  • January 9, 2019
  • 2 replies
  • 9 views

My bookkeeper set up a liability via journal entry:

Dr Prepaid Expense 

Cr Accounts Payable - vendor

as payments were made to the vendor the following entry was made:

Dr Insurance expense

Cr Bank account

 

Issue is the liability is still on the books.

 

Also, payments are not made through quickbooks but through a separate check book.

 

How do I clear the accounts payable balance from this transaction

2 replies

C
Charies_M
Level 9
January 9, 2019

I'm glad you came here for support, Don Romaniello.

 

Let me help you clean up your accounts payable balance.

 

Your second entry should debit Accounts Payable or create a Bill Payment to balance it off.

 

Moving forward, when dealing with prepaid expenses, you can write a check to the vendor and record it to your Accounts Payable (A/P) account to decrease the balance until you are ready to enter the final bill.

 

To create a check for vendor, here are the steps:

  1. Go to the Banking menu.
  2. Select Write Checks.
  3. Enter the vendor name, date, and the payment amount.
  4. Go to the Expenses tab. In the Account column, enter Accounts Payable.
  5. In the Customer:Job column, click the drop-down, then choose the vendor name.
  6. Select Save & Close.

Once you're ready to enter the Bill, you can follow the steps below:

  1. Go to the Vendors menu.
  2. Select Enter Bills or Receive Items (if you like to record the bill later).
  3. Fill in the necessary information.
  4. Select Save & Close.

Now, here are the steps on how to apply the prepayment to a bill.

  1. Go to the Vendors menu, then select Pay Bills.
  2. Highlight the bill you want to associate with the prepayment.
  3. Select Set Credits.
  4. The prepayment will display in the Set Credits screen. Make sure it is checked, then select Done.

For more information on how to record vendor prepayments using Accounts Payable in QuickBooks Desktop, feel free to check out this article: Record vendor prepayments or deposits for prepaid parts or services.

 

Fill me in if you have more questions or clarifications while working with your books. I'll be here whenever you need help.

H
Haseeb Abddullah
December 17, 2022

Hi. 

I am using quickbooks desktop. I have issued cheques against my payables in future dates. 

But when i open my balance sheet till todays date its showing all my future paybles in balance sheet. How can i fix this issue. 

It must shows only those payables for which cheques are not issued. 

 

T
TirzahC
Level 4
December 17, 2022

Hi, Haseeb Abddullah.

 

I'm here to help figure out why it still shows future payables in balance sheet report.

 

The AP account in the Balance Sheet report includes all transactions related to all of your suppliers. Your supplier may be fully paid, but there may be other payables from other vendors.

 

To fix this, we'll need to open the issued check payment to verify if it's linked to the AP account and to a bill. 

 

I'm including this helpful article in case you need to resolve your AP balances: Resolve A/R or A/P balances on a cash basis Balance Sheet.

 

I've also included an article that'll help you check the complete list of workflows and other vendor-related transactions: Accounts Payable workflows in QuickBooks Desktop.

 

Additionally, you can visit this link to further help you in fixing your balance sheet: Fix a Balance Sheet that's out of balance. You'll also find here a link for doing advance troubleshooting in fixing balance sheet issues.

 

Don't hesitate to click the Reply button if you have other QuickBooks concerns. We're always here to help. Take care always.

qbteachmt
qbteachmt
Level 11
January 9, 2019

You actually have Two Problems. The JE is creating artificial Asset (prepaid expense) and artificial AP. Neither is right. Just delete that JE. You never use a JE in QB for AP, and not when Names are involved.

 

The "credit" to Banking should have been Write Check. You can replace each JE with a Check. Payee = the insurance agency. List the insurance Expense on the Expenses tab.

 

If you are a Cash Basis entity, the prepaid entry was already the wrong accounting for your requirements. And functionally, it was wrong, because it was not actually Prepaid. "Prepaid" would have been From Checking, not as as JE against AP. This entry was running the data in circles on the balance sheet.

 

If that other account is not in the QB file and it belongs to this business, it needs to be In this File and managed. You told us the "expense" JE is crediting some sort of Bank in this file?

 

Once you replace the Expense JE with the actual Checks from the right bank account, you can manage that bank account properly.

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