Confusion on fixing negative balance on one vendor and applying it to another.

HilW19 · ‎February 01, 2024

We have a loan payment we are paying back to one of the owners of the company. The last bookkeeper had all those payments set up to go into his vendor account that is set up for 1099 (we rent equipment from him so that is the reason for the 1099 on this one). This obviously is not an income, so we made another vendor labeled the same, but as "loan" so next year it does not hit the 1099 report. We all the bills to the "loan" vendor, but the bill payments are stuck in the old vendor. I for the life of me can't figure out how best to clear these up so the balance is $0 and no longer shows on the aging for either account.

AnneMariee · ‎February 01, 2024

Hi there, HilW19.

I'm here to walk you through the process of writing off a negative vendor balance so you can zero out balances on your Accounts Payable (A/P) account.

In QuickBooks Desktop, we'll use a temporary clearing account to transfer available credits from one vendor to another.

First, let's set up a clearing account to move the existing credit from the vendor. Here's how:

Go to the Lists menu, then select Chart of Accounts.
Right-click anywhere in the Chart of Accounts then choose New.
Once you are in the Add New Account window, choose Bank then select Continue.
In the Account Name field, you can put in Clearing Account, Barter Account, or Wash Account.
Leave the Opening Balance field blank, then select Save & Close.

Then, create a Journal Entry to move the credit from the existing vendor to the clearing account.

Go to the Company menu, then select Make General Journal Entries.
On the first line, credit Accounts Payable with the amount to be transferred. In the Name column, select the vendor from whom the credit is coming.
On the second line, debit the Clearing account created beforehand with the same amount.
Select Save & Close.

After, apply the credit to the Journal Entry created as an unpaid bill.

Go to the Vendors menu, then select Pay Bills.
Select the bill created by the Journal Entry (it will appear without a due date).
Select Set Credits.
Go to the Credits tab then select the credit. Select Done.
Select Pay Selected Bills.

Then, create a Journal Entry to move the credit from the clearing account to the vendor.

Go to the Company menu, then select Make General Journal Entries.
On the first line, debit Accounts Payable with the amount to be transferred. In the Name column, select the vendor who will receive the credit.
On the second line, credit the Clearing account with the same amount.
Select Save & Close.

Once done, the balance on the old vendor will clear up and will no longer show on the aging report.

You can refer to this article: Transfer and apply credit from one vendor to another. It contains screenshots to guide you in the process.

You can also customize reports in QuickBooks to get specific information. A detailed guide can be found in this article: Customize reports in QuickBooks Desktop.

Please let us know if you have any further questions regarding writing off vendor balances in QuickBooks. We're always here to help and support you. Keep safe!

View solution in original post

AnneMariee · ‎February 01, 2024

Hi there, HilW19.

I'm here to walk you through the process of writing off a negative vendor balance so you can zero out balances on your Accounts Payable (A/P) account.

In QuickBooks Desktop, we'll use a temporary clearing account to transfer available credits from one vendor to another.

First, let's set up a clearing account to move the existing credit from the vendor. Here's how:

Go to the Lists menu, then select Chart of Accounts.
Right-click anywhere in the Chart of Accounts then choose New.
Once you are in the Add New Account window, choose Bank then select Continue.
In the Account Name field, you can put in Clearing Account, Barter Account, or Wash Account.
Leave the Opening Balance field blank, then select Save & Close.

Then, create a Journal Entry to move the credit from the existing vendor to the clearing account.

Go to the Company menu, then select Make General Journal Entries.
On the first line, credit Accounts Payable with the amount to be transferred. In the Name column, select the vendor from whom the credit is coming.
On the second line, debit the Clearing account created beforehand with the same amount.
Select Save & Close.

After, apply the credit to the Journal Entry created as an unpaid bill.

Go to the Vendors menu, then select Pay Bills.
Select the bill created by the Journal Entry (it will appear without a due date).
Select Set Credits.
Go to the Credits tab then select the credit. Select Done.
Select Pay Selected Bills.

Then, create a Journal Entry to move the credit from the clearing account to the vendor.

Go to the Company menu, then select Make General Journal Entries.
On the first line, debit Accounts Payable with the amount to be transferred. In the Name column, select the vendor who will receive the credit.
On the second line, credit the Clearing account with the same amount.
Select Save & Close.

Once done, the balance on the old vendor will clear up and will no longer show on the aging report.

You can refer to this article: Transfer and apply credit from one vendor to another. It contains screenshots to guide you in the process.

You can also customize reports in QuickBooks to get specific information. A detailed guide can be found in this article: Customize reports in QuickBooks Desktop.

Please let us know if you have any further questions regarding writing off vendor balances in QuickBooks. We're always here to help and support you. Keep safe!

HilW19 · ‎February 16, 2024

Worked perfectly! Thank you!

HilW19 · ‎February 16, 2024

One thing...it still shows up on the "Unpaid Bills" Report. The amount is $0, but shows all the transaction's. How do I clear this up?

JoesemM · ‎February 16, 2024

Good day, @HilW19.

I’m glad to know that the information provided by my colleague above has helped you to figure this out. Also, you'll want to filter the correct dates in the Unpaid Bills report since it will default to show bills dated today and earlier.

Please note that if you have made a partial payment on a bill, only the outstanding amount due will be displayed under the Open Balance column. This amount is not due, so we will need to clear it out of our Accounts Payable account. To clear this out, follow the steps shared by my colleague above.

I'm also adding these articles that can help guide you in your future tasks:

If you have any other concerns about running reports in QuickBooks count me in. I'll surely get back to you. Take care.

HilW19 · ‎February 19, 2024

With today's date 2/19 it still shows them all. See screenshot...

ArielI · ‎February 19, 2024

Hello, @HilW19.

I can help you account for the bills when you run the Unpaid Bills Report in QuickBooks Desktop (QBDT).

Please take note that you can take specific actions to address the issue and ensure that the Unpaid Bills report accurately reflects the status of your transactions.

Moreover, since the transactions were indeed paid bills from the screenshot you've provided, you should connect them to the bill to ensure it doesn't stay unpaid. Here's the process:

Go to Vendors.
Hit the Pay bills.
Select the transactions you want to link.
Click the set credits.
Then hit the pay selected bills.

I'll include this article that discusses more on how to track vendor transactions in QuickBooks Desktop: Accounts Payable workflows in QuickBooks Desktop.

If you have further questions about bills, you can comment below, and we'll respond to you as soon as possible.

HilW19 · ‎February 19, 2024

Oh my goodness....thank you so much! I thought I had already done that step that is why I was wondering why it was still there. I did it on one end and not the other apparently. Thank you all very much again for helping me with this little hiccup I had in my brain. LOL

MAnneJ · ‎February 19, 2024

Thanks for coming back to the thread, @HilW19.

I'm glad to hear that the solution my colleague has provided was able to help you. Our main objective is to provide you with the necessary support to increase your satisfaction.

I'll keep this thread available if there's anything else you need further assistance in QuickBooks Desktop. I'm just one click away. Keep safe!

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Confusion on fixing negative balance on one vendor and applying it to another.