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Hi there, @bcreative.
I'd be glad to help you deduct the invoice payment amount from your bill payment from the same person through a Journal Entry.
First, create a Journal Entry transaction, Credit the $100 to the Accounts Receivable account on the first line, and on the second line Debit it from the Accounts Payable account. Then, create a Receive payment transaction to apply the amount from the Journal entry to the invoice. Once done, you can create a Bill payment transaction for $900 and link the Journal Entry amount. Make sure to check the correct transactions in the Outstanding transactions and Credits fields. This is a sample data to see how it looks like.
You can also reach out to your accountant if you need further assistance with creating the journal entry. If you don't have an accountant, you can choose between the two options for you to get assistance with this:
If you have any more questions or concerns, please don't hesitate to tag my name in the comment section. Enjoy the rest of your day!
Hi there, @bcreative.
I'd be glad to help you deduct the invoice payment amount from your bill payment from the same person through a Journal Entry.
First, create a Journal Entry transaction, Credit the $100 to the Accounts Receivable account on the first line, and on the second line Debit it from the Accounts Payable account. Then, create a Receive payment transaction to apply the amount from the Journal entry to the invoice. Once done, you can create a Bill payment transaction for $900 and link the Journal Entry amount. Make sure to check the correct transactions in the Outstanding transactions and Credits fields. This is a sample data to see how it looks like.
You can also reach out to your accountant if you need further assistance with creating the journal entry. If you don't have an accountant, you can choose between the two options for you to get assistance with this:
If you have any more questions or concerns, please don't hesitate to tag my name in the comment section. Enjoy the rest of your day!
Thank you!
Hello, I have the same question but for QB Premier 2020. Would the steps be the same? Thanks for any input!
We have different steps in QuickBooks Desktop, @kim. Happy to outline the detailed steps for you.
I'm pleased to guide you on how to pay your vendor in QuickBooks Desktop.
In QuickBooks Desktop, we'll need to create a clearing account first. This way, we can move the Accounts Payable (A/P) to Accounts Receivable (A/R). Follow the steps below:
After that, let's create two entries to move the funds accordingly. Do the following:
Once done, in either Pay Bills or Receive Payments, link the Journal Entries together. Do the following:
For more details, see this link: Set up a clearing account.
Further, check out these articles below on how to handle vendors/customer credits, AP, AR, and other related matters:
Swing by here again if you have other questions or concerns about vendor transactions. I'm always here at your back. Take care, Kim.
@MichelleBh - Thank you for getting back to me! I do have a couple follow up questions.
I did the 2 JE's as indicated. Then I went into AR and applied the credit to the 6 invoices. When I look at the customer account, now I see the JE I entered as a credit for 1,541,393.29 with an open balance of -486,256.91. I also see a payment on the customer account for 1,541,393.29. I have confirmed that the invoices are now 0. I also confirmed that the amount of the invoices matches the JE of 1,541,393.29. Why is there an open balance?
I'm going to try to clear the AP transactions next week as there are 85 line items.
Thank you for coming back to the Community, Kim Perico.
I appreciate you for following the solution shared by my peer and informing us of the result. This information will guide us on how to correct the open balance.
We’ll have to open your Accounts Receivable (A/R) account to look for the transaction that’s causing the open balance. Let me help show you the steps to get there.
Here’s how:
Otherwise, tap the Receive Payments menu to pay the transaction to close it. Performing this task will decrease the balance in your A/R account.
However, if it’s already paid, download the latest maintenance release for your QuickBooks. This will resolve any issues you experiencing while working in the program and apply the critical fixes.
If none of these suggestions work, run the Verify and Rebuild Data Utilities to see if there’s data damage. These built-in tools will resolve integrity issues in the company file.
Here’s a resource that can help you organize your cash flow, and track sales, receivables, and profitability more accurately: Get started with customer transaction workflows in QuickBooks Desktop. It contains some links on how to run each process as well as screenshots for visual reference.
Keep in touch if you have any clarifications or questions on how to keep your customers balance in order. I’ll jump right back in to answer them for you. Enjoy the rest of the day.
When I look at the TB for the receivable account there is a credit balance of 1,541,393.29. This account should be zero. I haven't cleared the payables account yet so maybe one of the entries will go away when I do? I did 2 JE's as instructed:
Dr Clearing account 1,541,393.29 and Cr AR for the same amount with the customer name
Dr AP 1,541,393.29 with the vendor name and Cr Clearing account for the same amount
The clearing account is 0 so the 2 entries appear to be correct.
The payables account on the TB is 494,582.57 but I haven't cleared the payable invoices yet. The balance is probably correct now (494k) but once I clear the 1.541m of invoices it will probably be a debit balance. Which obviously isn't correct.
I'm hoping you can share some insight as to what I'm doing wrong.
Thank you for getting back to us and updating us with the results following the steps provided by my colleagues above, @kim. Let me share the steps to proceed and get the result you want.
You can now create a Receive Payment and Pay Bills transaction. This way, you can link the credits to the open invoices and open bills.
Follow these steps:
Once done, you can pay the bills. This way, you can link the credits to the open invoices and bills. Refer to this article for the detailed steps: Pay bills in QuickBooks Desktop.
You can also check this article for steps to record bank deposits in QuickBooks Desktop.
I'll be here to help if you have other questions about invoices and bills in QuickBooks Desktop.
Thank you for all the support but I'm going to remove the entries I've made and start over.
Hi @MarsStephanieL ,
I tried making this journal entry but got this error message: ''You cannot use more than one AP or AR account in the same transaction.''
Why do you think I received this error message?
One potential cause you've received the error message is recording transactions that use two A/R or A/P accounts, @Desie24.
The message will pop up once you try saving the said transaction. To prevent the error, we can write off a receivable against a payable. That said, you'll have to set up a Clearing Account.
To set up a clearing account
You can continue to step number 4 for a detailed guide to setting up a clearing account and how to use it.
Additionally, you might want to consider checking these articles and to learn more about the journal entries:
We are pleased to assist you if you require additional assistance managing your journal entries in QuickBooks Online. Have a great day ahead!
The advice you received from @MAnneJ is poor. It's shocking how poorly QB employees know Quickbooks. In QB Online, you can use A/R and A/P on the same journal entry. However, you cannot in QB Desktop. This thread is about QB Online. The best way to offset A/P and A/R is to create a bank account called 'Clearing Account'. Then, if you want to apply A/P to A/R, pay the bill from the Clearing Account and receive payment on the invoice for the amount in the Clearing Account. The Clearing Account is $0, the bill is paid, and the invoice has been reduced by the amount of the bill. If you want to apply A/R to A/P, receive payment on the invoice and deposit it to the Clearing Account. Then, pay the bill down by the amount in the Clearing Account. The Clearing Account is now $0 and the bill has been reduced by the A/R amount.
Thanks a lot for your answer @Rainflurry . However, the Clearing account will be in a negative balance. How do I pay the bill with the correct account after paying with clearing account.
Hi @Rainflurry GOT IT! Thanks for the help.
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