Applying a reconciled check to a bill.
I recently started working for a foundation that gives grants to local nonprofits.
When we award a grant, we set up an A/P account for the grantee and also create them as a vendor in Quickbooks Online. We then do a journal entry that credits the A/P account and debits an expense to the vendor, like this:
Grants Payable: FA24-27 An Awesome Agency Account: Credit 10,000
Grants Expense: FA24-27 An Awesome Agency Vendor: Debit: 10,000
When we issue checks to the Grantees, we've been categorizing the payment under the AP account.
This clears the A/P account so that it shows a zero balance.
However, it leaves the Vendor with an unpaid bill.
I've found the simple solution to this is to apply the check payment to the open bills created through the journal entry while I'm writing checks. I will do that going forward.
Now I'm wondering about how to go back and clear out the years and years of unpaid bills that have accumulated up to this point.
Thoughts about how to clean up this mess? I was hoping to be able to tie the checks to the bills after they've been written and reconciled (I don't want to undo reconciliations from years ago!), but I'm not seeing a way to do that.