Offset A/R and A/P Using Credit Memo and Credit - Accounting Software Secrets
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Offset A/R and A/P Using Credit Memo and Credit

Offset A/R and A/P Using Credit Memo and Credit

Offset A/R and A/P Using Credit Memo and Credit


In this example we will look at offsetting amounts owed to a customer and a vendor using a credit memo and credit respectively.

The other two alternatives are: using a bank clearing account or entering a journal entry for the vendor and customer, respectively using a clearing account.

The first step is to create a clearing account on the chart of accounts. Any type of account will work since the balance should always be zero.  For our example, we will use the bank type of account. For our purposes here, we will name the account “Clearing.”

QBRA-2004: Lists > Chart of Accounts > Account > New

Next create an item coded to this Clearing account for use on the forms.  The type is not extremely important, but we will choose to use the other charge type of item so it will appear on reports separate from the typical items that are bought and sold.  The tax code should be “non.”

QBRA-2004: Lists > Item List > Item > New

Enter the amount of the credit memo to offset the Accounts Receivable balance for the customer.

QBRA-2004: Customers > Create Credit Memo/Refund

Next enter the credit to offset the amount due to the vendor in the same amount.

QBRA-2004: Vendors > Enter Bills > Credit radial button

It is also a good idea at this point to go back and link the transactions as appropriate for the customer and vendor, respectively.

Double check that the ending balance in the clearing account is zero. Like any Balance Sheet account, it is also possible to reconcile this account. The reconciliation procedures can be helpful in finding the problem if the balance is not zero.

QBRA-2004: Lists > Chart of Accounts > Clearing > Activities > Use Register


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