Vendor Credits

intuit broke the accounting rules with vendor credits, you enter a vendor credit and what it does is lower the accounts payable balance on the balance sheet.  A vendor credit is held in a/p, and a customer credit is held in a/r.

enter the vendor credit, that is all you can do in QB reasonably easy

@AshL ,

Pull up each vendor credit, and check the category(account) that was credited when the transaction was created.  There may have already been a decrease in an expense for these vendor credits.

To find them all quickly, run a Transaction List by Vendor for All dates, and filter by Transaction Type: Vendor Credit.

Thanks so much. I now see that it is reducing the Accounts Payable. However, that was just one credit I entered. By the time I'm done entering all of them, it will reduce A/P to a negative.  I don't believe I should have negative amounts on the Balance Sheet. Correct?

Is there a work around for this?

Thanks so much.  Your response was similar to Rustler's (above).  I do realize now that it's reducing other accounts/amounts.  I have more credits to enter and while they will reduce their relative expense accounts, I will end up with a negative amount in my Accounts Payable. 

Do you know if there's a work around for this? 

@Rustler 

Thanks so much. I now see that it is reducing the Accounts Payable. However, that was just one credit I entered. By the time I'm done entering all of them, it will reduce A/P to a negative.  I don't believe I should have negative amounts on the Balance Sheet. Correct?

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@AshL wrote:

@Rustler 

Thanks so much. I now see that it is reducing the Accounts Payable. However, that was just one credit I entered. By the time I'm done entering all of them, it will reduce A/P to a negative.  I don't believe I should have negative amounts on the Balance Sheet. Correct?

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Well no you should not have a negative a/p, or a negative a/r for that matter.  But in QB that is an issue that does arise because of the way intuit wrote the program.  I had a negative a/p on the balance sheet one time when I had to show the balance sheet to a bank loan officer - that was an interesting discussion to say the least.  I got it worked out, but it was a pain at the time.

One aspect of this though is why are you paying vendors more than you owe, or why buy things and then return them in a qty large enough to cause this situation?

@Rustler 

You're right to ask those questions. I, too, have a lot of questions.  Basically I was hired in September 2021.  Prior to that time, the company (young and small) wasn't using accounting software.  The owner created his own financial statements.  There were many things missing from the statements or categorized incorrectly. 

Because I was just entering in everything that had happened throughout the year with bank statements and receipts, I used the journal entry method to enter everything.  So basically everything was entered as cash basis...with the hopes of starting this year off right with actually creating vendors, etc.  

The owner has verbally given me these "vendor credit" amounts and since everything has been done as journal entries, there's no way to match these credits with anything.  

I feel like even if I had more experience, this is not a "me" issue nor a QuickBooks issue...but an issue with how things were done in the past and the mess I'm now trying to clean up.

Surprisingly, this is my last issue to fix....and it may be impossible.