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M
Merkay
February 2, 2023
Question

Customer A paid for Customer B's invoices and its bill.

  • February 2, 2023
  • 1 reply
  • 0 views

Hi All,

 

Thanks in advance for trying to help.

 

I have a public warehouse business so the issue is; 

Customer, A, who owes me, let's say 25k, and does business with Customer B for his goods at the warehouse. Customer A sells the goods for 35K to customer B. And asks Customer B to send full 35k to me. Asks me to close his balance for 25k and send the remaining 10k to him for his cost of goods sold. 

 

How do i record this transaction in QuickBooks desktop enterprise?? 

 

Thank you for your help. 

1 reply

katherinejoyceO
katherinejoyceO
February 2, 2023

Hello there, @Merkay.

 

It's an honor to help you in recording payments from one of your to another. 

 

First off, you'll need to create a wash account to move the money from one account to another. I'll show you how:

 

  1. Go to the Lists menu, then to the Chart of Accounts.
  2. Right-click anywhere in the Chart of Accounts, then choose New.
  3. Choose Bank, then clickContinue.
  4. In the Account Name field, Enter a name like Clearing Account, Barter Account, or Wash Account.
  5. Leave the Opening Balance field blank, then hit Save & Close

 

After that, create a journal entry to transfer the amount from the collection agency to the clearing account. Here's how to that:

 

  1. Go to the Company tab.
  2. Choose Make General Journal Entries.
  3. On the first line, debit the Accounts Receivable with the amount to be transferred then add the customer name in the Name column.
  4. On the next line, credit the Clearing Account.
  5. Click Save & Close.

 

Then, link the payment to the journal entry. Let me guide you on how to do that:

 

  1. Go to the Customer tab.
  2. Select Customer Center.
  3. Choose the customer you're transferring the payment from, then go to the Transactions tab.
  4. Double click the payment and mark the journal entry.
  5. Click Save & Close.

 

After linking the payment, create another journal entry to move the payment from the clearing account to the customer. 

 

Here's how:

 

  1. Go back to Make General Journal Entries section under your Company tab.
  2. Credit Accounts Receivable with the amount to be transferred, then select the customer name in the Name column.
  3. Debit the Clearing Account, then click Save & Close.

 

Lastly, apply the credit to the unpaid invoice. Here's how:

 

  1. Go to the Customers tab.
  2. Choose Receive Payments.
  3. Select the customer you're transferring the payment to.
  4. Mark the appropriate invoice and select Discounts & Credits.
  5. Go to the Credits tab and select the credits you want to apply.
  6. Click Done.
  7. Click Save & Close.

 

You'll want to visit this article want to check to know more details about the process: Transfer customer credit from one job to another in QuickBooks Desktop.

 

Feel free to update me if you need further assistance. I'll be glad to guide you again. Have a good day!

M
MerkayAuthor
February 15, 2023

Thank you so much for your help. However, this did not solve the issue at hand. I might not have been clear enough so i am going to break it down as much as i can,

  1. Client A has an open Invoices to amount $50k
  2. Client B purchases Client A's goods. The cost is $25k 
  3. Client B sends $25k to me and requests
    1. to apply $20k for Clients A's invoices 
  4. Send remaining $5k to seller for his cost of goods sold.

 

Hope this clarifies above questions.

 

Thank you

 

 

 

R
RCV
February 15, 2023

Thanks for coming back and providing us with in-depth details of your concern, Merkay.

 

We can transfer credits from one customer job to another as long as you have an access to the Chart of Accounts to complete this process. Here's how:

 

  1. Open the invoice you're transferring the credit to.
  2. Select Apply Credits. Credits from another customer job would show under available credits.
  3. Choose the existing credits then Done.
  4. On the Confirm transfer window, press Yes to complete the transfer.

 

 

 

This is a permanent action. If you need to change or reverse this action, please consult with your accountant before doing so. When performing this action, QuickBooks will generate two General Journal entries to transfer the credits to the appropriate Job. The memo for these journal entries will say "Transfer of Credits for..." to make it easier to understand later. In addition, when using the transfer credits feature for the first time, the software creates an "Other Current Assets" clearing account to move the credits. It will appear inactive, indicating that it is only used to transfer credits.

 

Also, following the steps provided by my colleague above, should enable you to transfer the money paid from one customer to another using the Journal Entry (JE). Then, link the payment or credit to the journal entry and applied the credit to the unpaid invoice. Also, I highly recommend you reach out to your accountant for expert advice. This also ensures that your books or records are accurate.

 

For future tasks, you may find the below links helpful about managing your invoice payments:

 

 

Get back to me if there's anything else I can assist you with, in managing your QuickBooks account. I'm always here to lend a hand.

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