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How do I create a journal entry to offset a credit in A-P?

In mid 2016 we received a credit memo from a vendor which was entered into A-P. 

On March 30, 2017 that vendor  issued a refund check for the amount of the remaining credit balance.  I entered a journal entry that debits the expense account with the vendor name and credits A-P payable with the vendor name so the credit memo in this vendor account should be gone (washed out to 0.00).  

When I try to add these under the vendor to wash it out and create a 0.00 balance it tells me there is an error somewhere.  How do I fix this journal entry and then remove the debit and credit in the vendor?

Thank you!

Solved
Best answer 10-15-2018

Accepted Solutions
Level 15

You don't use JE for AP. You already have the AP credit....

You don't use JE for AP. You already have the AP credit. It is time to process the Refund as a Deposit, not Expense = AP; you have the condition of funds to Bank = AP refund. You are offsetting this to the wrong account. The Vendor Credit should show the reversal of the Expense already, and that is why it created a negative AP for that vendor name. Deposit to Bank = "AP" for that same Vendor Name. That way, paying bills allows you to apply the refund deposit to the open vendor credit.

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2 Comments
Level 15

You don't use JE for AP. You already have the AP credit....

You don't use JE for AP. You already have the AP credit. It is time to process the Refund as a Deposit, not Expense = AP; you have the condition of funds to Bank = AP refund. You are offsetting this to the wrong account. The Vendor Credit should show the reversal of the Expense already, and that is why it created a negative AP for that vendor name. Deposit to Bank = "AP" for that same Vendor Name. That way, paying bills allows you to apply the refund deposit to the open vendor credit.

View solution in original post

Level 1

To expand on the previous answer, just go to deposits, en...

To expand on the previous answer, just go to deposits, enter your vendor name and use "AP" as your account.  Once done, you can go to "Pay bills".  Then, under that vendor will show your deposit as a "bill", and you can zero it out with the credit that is sitting there....

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