Skip to main content
S
SB8
June 22, 2020
Solved

How to create Journal entry for credit note for a vendor bill, and then apply the same to pay the next bill?

  • June 22, 2020
  • 2 replies
  • 0 views

Hi All,

 

We recently shifted from Quickbooks Enterprise to Quickbooks Online, and did not migrate the entire data but rather started fresh in QBO by updating opening balances as of Jan 1, 2020.

 

Now there was a credit note issued by a vendor in 2019, and this was applied in Feb 2020. Also, the service provided by the vendor is annual. Hence all bills received are for future period, and we first debit the prepaid account and create a monthly journal to expense off.  I created JE by crediting Prepaid and debiting vendor account, but the JE does not appear in "Pay Bills" window when I select the vendor name.

 

I need help on:

 

1. How to create the JE for this credit note from Vendor. Which account do I need to debit and credit.

2. 

 

Best answer by MarsStephanieL

Hi there, @SB8.

 

You have to create a Bill transaction so that you can see a transaction in the Pay bills page. Then create a Journal Entry (JE) for the vendor credit that will be applied to the Bill transaction that you've created. I'll guide you through the steps on how to do that, I added screenshots too after every process as a reference.

 

Please take note that the accounts used in this example is only for clarification purposes. We aren't able to advise as to which specific account you should apply the transactions. I suggest doing this with your accountant to avoid messing up your books in the future.

 

Here's how:

 

Step 1: Create a Journal Entry transaction

 

  1. Go to the + New button and select Journal Entry.
  2. In the first line item, I use the Job Supplies account and entered the amount under the Credits column.
  3. In the second line item, I use the Accounts Payable account and entered the amount under the Debits column.
  4. Enter the Vendor's name.
  5. Verify and select the Save button. (Here's how it looks like).

 

Step 2: Create a Bill transaction

 

  1. Go to the + New button and select Bill under the Vendor column.
  2. Enter the name of the vendor, category or the item details, the date and the amount.
  3. Verify the details and click Save and close. (Please see attached screenshot below).

 

Step 3: Create a Pay Bill transaction (This is done to link the Vendor credit via JE and Bill transaction)

 

  1. Go to the + New button and select Pay bills under the vendor column.
  2. Tick the box of the Bill transaction, with the vendor credit from the JE you've created under the Credit applied column.
  3. Click in the Credit applied box to see the vendor credit you've added and enter the amount of the Bill.
  4. Verify and then select Save and close.

 

To see the transactions you've made with your vendor, you can run a Transaction List by Vendor report then customize it to see the essential variables of your report.

 

You can also memorize the customized report so that you'll no longer do the same process in customizing your report. Here's an article that shows the steps on how to do that: Memorize reports in QuickBooks Online.

 

Please don't hesitate to comment below if you need anything else. I'll be here to help you. Stay safe out there and have a good one!

2 replies

Fiat Lux - ASIA
Fiat Lux - ASIA
June 22, 2020

Utilize the trial period of TP Importer to import the data as Vendor Credit.

https:// transactionpro.grsm.io/qbo

 

MarsStephanieL
MarsStephanieLAnswer
June 22, 2020

Hi there, @SB8.

 

You have to create a Bill transaction so that you can see a transaction in the Pay bills page. Then create a Journal Entry (JE) for the vendor credit that will be applied to the Bill transaction that you've created. I'll guide you through the steps on how to do that, I added screenshots too after every process as a reference.

 

Please take note that the accounts used in this example is only for clarification purposes. We aren't able to advise as to which specific account you should apply the transactions. I suggest doing this with your accountant to avoid messing up your books in the future.

 

Here's how:

 

Step 1: Create a Journal Entry transaction

 

  1. Go to the + New button and select Journal Entry.
  2. In the first line item, I use the Job Supplies account and entered the amount under the Credits column.
  3. In the second line item, I use the Accounts Payable account and entered the amount under the Debits column.
  4. Enter the Vendor's name.
  5. Verify and select the Save button. (Here's how it looks like).

 

Step 2: Create a Bill transaction

 

  1. Go to the + New button and select Bill under the Vendor column.
  2. Enter the name of the vendor, category or the item details, the date and the amount.
  3. Verify the details and click Save and close. (Please see attached screenshot below).

 

Step 3: Create a Pay Bill transaction (This is done to link the Vendor credit via JE and Bill transaction)

 

  1. Go to the + New button and select Pay bills under the vendor column.
  2. Tick the box of the Bill transaction, with the vendor credit from the JE you've created under the Credit applied column.
  3. Click in the Credit applied box to see the vendor credit you've added and enter the amount of the Bill.
  4. Verify and then select Save and close.

 

To see the transactions you've made with your vendor, you can run a Transaction List by Vendor report then customize it to see the essential variables of your report.

 

You can also memorize the customized report so that you'll no longer do the same process in customizing your report. Here's an article that shows the steps on how to do that: Memorize reports in QuickBooks Online.

 

Please don't hesitate to comment below if you need anything else. I'll be here to help you. Stay safe out there and have a good one!

R
rhea3
October 2, 2020

When I pay a vendor bill using a vendor credit this way, my account entries on the bill get divided.

Example:  One bill has several charges that go into several different accounts.  I put the single amount charges in the correct accounts.  I enter the vendor credit ( that is given on the bill)  under vendor credit on the left in the vendor account. I go to Pay Bills and the vendor credit applies.  I then pay the bill with a check.  I go to the accounts to view the single charges and they are divided in two amounts but equal the single charge entered.  What am I doing wrong?

R
ReymondO
October 2, 2020

Hi there, @rhea3.

 

Let me share with you more info on how to use vendor credits in QuickBooks Online (QBO). 

 

Once you create this transaction in QBO, you can use it to either record returns to your vendors or refunds from vendors. If a vendor issues you a credit, you can apply that credit manually in the Credit Applied column in Online Bill Pay.

 

What you've done is correct. However, since you've entered different accounts to a single bill, this will automatically be recorded as a split transaction. This is the reason why your account entries on the bill are divided.

 

In addition, you don't have to create a check to clear the bill if a vendor credit was already applied to it. Doing this will record another expense transaction in QuickBooks.

 

In case you want to unrecord this check, you can simply delete it.  

 

To know more about when to use bills, bill payments, expenses, or checks in QBO, you can check out this article: What is the difference between bills, checks, and expenses?

 

Please let me know if there's anything else I can do to be of assistance. Just place your concern by clicking Reply and I'll get back to you. Wishing you and your business continued success in all that you do.

Terms & ConditionsAccessibility statement