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PortMike
Level 3

Incorrect customer credit

I have a customer who paid a deposit for service(s) in 2014 but was not able to use the service(s) in that year.  My accountant did a journal entry to defer recognition of the payment from 2014 to 2015 as follows:

 

12/13/2014

Accounts receivable (A/R)     7,277.06                                                              customer name

Other Current Liabilities                                      7,277.06

 

01/01/2015

Accounts receivable (A/R)                                  7,277.06                                 customer name

Other Current Liabilities       7,277.06

 

The customer used the service(s) in 2015 and the deposit funds were applied to the invoices.

The problem is now that when I generate a new invoice for this customer this amount shows as an available credit that doesn't really exist.  How do I clear this false credit?

Solved
Best answer October 13, 2020

Best Answers
PortMike
Level 3

Incorrect customer credit

Jamespaul, Thanks you for your reply.  However, the problem with your solution below is that it would affect current year income or expenses.  My accountant came up with a simple solution:

 

Go to Customer Center

Under New Transactions, Select “Receive Payments”

In the “Received From” drop down, choose the customer's name

Leave the payment amount as zero

Choose the option at the top ribbon that says “Discounts and Credits”

A dialogue box will appear with the Credit amount set to automatically apply

Select Ok/Done and then save the transaction.  Even though it is a “zero” transaction it will automatically apply the credit against our journal entry and get it out of the system.

 

The above worked perfectly

View solution in original post

8 Comments
Joesem M
QuickBooks Team

Incorrect customer credit

I appreciate the detailed information you've shared, @PortMike.

 

Let's work together to resolve the open balance, so you can now create a new invoice in QuickBooks.

 

First off, let's go to your preferences and turn off the auto-apply payments feature. This way, QuickBooks won't automatically apply credits to open invoices. 

 

Here's how:

 

  1. Go to QuickBooks, then select Preferences.
  2. Select Sales & Invoicing.
  3. Uncheck the Automatically apply payments box.

 

Then, review the 2014 and 2015 transactions to locate the Open balance. Once located, you can now apply it to the payment to the open invoices. I'll show you how:

 

  1. From the Customers menu, select Receive Payments.
  2. Select the customer: job and the A/R Account.
  3. Highlight the invoice you want to apply the credit to. (Don't put a checkmark in the box as the amount due in the top ‘Amount’ field, as a new payment instead of applying for the existing credit).
  4. Select the Discounts and Credits button.
  5. Use the available credit to pay the invoices.

 

You can click this article for detailed steps: Resolve common issues when applying a payment towards an invoice.

 

Once the open balance is cleared, you can now create a new invoice for your customer. Just click this article for reference: Create an invoice in QuickBooks Desktop.

 

You can also pull up the Transactions List by Customer report. This report shows payments you've received per customer and where it was deposited. 

 

Should you need additional information, please leave a comment below. I'm always around to help you out.

 

PortMike
Level 3

Incorrect customer credit

Josem M, thank you for your quick response.  However, the problem is not one of a payment not being applied to invoices.  The problem is QB show a customer credit where one should not exist.  Attached is a spreadsheet created from a Quick Report of the customer's activity. I have created separate columns for invoices and payments.  As you can see, the totals of invoices and payments match.  However, when we generate a new invoice for the customer and then go to apply a partial payment QB shows a false credit available equal to the amount of the 2014/2015 AJE's.  I am trying to get rid of the false credit.

Nick_M
QuickBooks Team

Incorrect customer credit

Hey there, PortMike. 

 

Thanks for dropping by the Community, I'm happy to help. If you're trying to void the customer credit, you can follow these steps:

 

To delete or void a credit:

  1. Click Lists at the top menu bar.
  2. Select Chart of Accounts.
  3. Double click your  account.
  4. Select the credit.
  5. Click Edit at the top menu bar.
  6. Select Delete Credit or Void Credit, and then click OK.

If you still need help, I would suggest reaching out to our support team as they would be able to dive into your account with you in a 1-on-1 setting and can help you fix this in no time. To reach them, follow these steps:

 

Open your QuickBooks Desktop to connect with us.

  1. Open QuickBooks.
  2. Go to Help, then select QuickBooks Desktop Help.
  3. Select Contact Us.
  4. Enter your concern, then select Continue.
  5. Choose a way to connect with us:
    • Start messaging with a support expert.
    • Get a callback from an expert (availability may be limited).

Chat with us online

Select your product and fill out the form to chat with an expert.

Thank you for your time and have a nice evening. 

PortMike
Level 3

Incorrect customer credit

Nick, You do not understand.  There is no credit to delete.  The credit that QB keeps wanting me to apply to the customer's invoice does not exist and there is nothing to delete.  Please look at the attached spreadsheet created from the customer's activity.  Furthermore, the issue began back in 2014-15 when an AJE was made to defer recognition of income from 2014 to 2015.  Those periods are long closed.  What I am asking is how I can get rid of a "ghost" credit that does not exist.

jamespaul
QuickBooks Team

Incorrect customer credit

Hello, PortMike.

 

Thanks for getting back to us. I have a solution that'll help you get rid of the "ghost" credit from the journal entries. 

 

You'll want to write off the "ghost" credit so it won't show up when you process an invoice or a payment. Ideally, you would want to use a journal entry again, then use an offsetting account (usually an expense but a professional accountant might be able to determine what to use). 

 

Take note that this will affect your books and involves the use of brute force corrections. Also since this is on a closed accounting period, I'd recommend reaching out to your accountant so they can guide you with the corrections. They'll also help you in selecting the correcting dates so your reconciled periods aren't affected. 

 

Here's how: 

 

  1. Click the Company menu, then select Make General Journal Entries.
  2. Choose Accounts Receivable for the first line, then enter 7,277.06 under Debit.
  3. Select the offsetting account (or create one by selecting <Add new>). 
  4. Add 7,277.06 under Credit
  5. Add the customer's name under NAME.
  6. Once done, click Save & close

 

jeoffset1.PNG

 

Next, you'll want to apply the offsetting journal entry with the "ghost" credit. Here's how:

 

  1. Go to the Customers menu, then select Receive Payments.
  2. Select the customer's profile (if it's not automatically populated). 
  3. Click the Discounts and Credits button.
  4. Check the credit (from the 2014-15's journal entry).
  5. Click Done.
  6. In the Receive Payments screen again, check the offsetting journal entry. 
  7. Once done, click Save & close

 

jeoffset2.PNG

jeoffset3.PNG

 

This will remove the "ghost" credit that prompts when you process an invoice payment. More details can be found here: Write off customer and vendor balances.

 

If you're looking to do other tasks after making the correction, feel free to visit our articles. They have detailed steps on handling customer sales, vendors, company data, etc.. Browse a topic and look for an article of your choice here

 

I'm willing to listen if you have other concerns regarding QuickBooks Desktop. Drop by in this thread again and I'll help you out. 

PortMike
Level 3

Incorrect customer credit

Jamespaul, Thanks you for your reply.  However, the problem with your solution below is that it would affect current year income or expenses.  My accountant came up with a simple solution:

 

Go to Customer Center

Under New Transactions, Select “Receive Payments”

In the “Received From” drop down, choose the customer's name

Leave the payment amount as zero

Choose the option at the top ribbon that says “Discounts and Credits”

A dialogue box will appear with the Credit amount set to automatically apply

Select Ok/Done and then save the transaction.  Even though it is a “zero” transaction it will automatically apply the credit against our journal entry and get it out of the system.

 

The above worked perfectly

View solution in original post

jtrout7
Level 1

Incorrect customer credit

I do not have the Top Ribbon with discounts and credits.  What should I do?  JTrout

 

JenoP
QuickBooks Team

Incorrect customer credit

Hi there, jtrout7.

 

The top ribbon section might have been hidden in the Customer Payment window. Go to the upper-right hand corner of the screen and click the small arrow that's pointing down. It will expand the screen and show the top ribbon. I'll also share a screenshot of this for more reference. 

 

Let me also share these articles for additional reference: 

 

 

Don't hesitate to reach out to us again or submit another question if you need anything else. 

 

top ribbon.PNG

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