Skip to main content
D
dranta
February 1, 2023
Solved

Vendor deposit and applying to bills

  • February 1, 2023
  • 2 replies
  • 0 views

I have a messy situation.  We just started the company and didn't have our bank set up or vendor account terms but needed heating oil.  So our CEO prepaid $4500 from his personal account so they would deliver.  Then we also paid an additional $2500 to the vendor directly when we received our checks and we paid the CEO back for the $4500.  We have 4 separate invoices to post against these deposits and will have a remaining credit which I would like it to show up on their account.  I see that you are to post deposits in the accounts payable category then enter a bill in when we receive invoices with the category for, in this case, fuel oil.  How do I handle this when one of the payments was not made directly to the vendor that I want to show all of the credits and debits?  Thanks!!

Best answer by Rainflurry

@dranta 

 

To properly record the heating oil expense paid for by the CEO and the subsequent reimbursement, first, create a bank account in QBO called 'Clearing Account'.  Then, create a bill from your vendor for $4,500 for the heating oil and pay it using the Clearing Account.  Then, create a journal entry to move the amount from the Clearing Account to a loan to pay the CEO - debit the Clearing Account and credit a Loan Payable.  Then, issue payment to the CEO and assign the Loan Payable account to the payment.  

2 replies

Nicole_N
Nicole_N
February 1, 2023

Hi there, @dranta. I've got some information you need in handling payments to vendors in QuickBooks Online (QBO). 

 

When making payments to the vendor, you'll have to use Accounts Payable as the expense (reason) for the payment. That will set a vendor credit that you can apply to the bill when it comes in, and pay the balance due. So to record the payment, you'll have first to create a new expense under that vendor. 

Here's how:
 

  1. In the left menu, click the + New button.
  2. Select Expense.
  3. Choose the Payee name and Payment account.
  4. Go to the Category details section.
  5. Under the Category column, select Accounts Payable (A/P).
  6. Enter the description and the amount.
  7. Click Save and close.

 

Then, enter the bill when it arrives and apply the prepayment. See this link for more information: Enter bills and record bill payments in QuickBooks Online.

 

I see that one of the payments was not made directly to the vendor. Can you tell me more about it? Did you pay your vendor manually? This way, I'd be able to give you an accurate resolution on how to handle this.

 

 I've also included these references that help you manage your expenses and vendors: 
 

The Community is always here if you have additional questions about vendor deposits in QuickBooks Online. Have a great day!

D
drantaAuthor
February 1, 2023

Thank you.  Yes I was able to do as you mentioned but the problem is that one of the payments made was to our CEO as we did not have an account set up yet.  So now I paid our CEO $4500 to repay him for this expense but I would like it to show up on our vendor account because we will still have a credit after all is said and done.  Can I do this by a journal entry?

Adrian_A
Adrian_A
February 1, 2023

I appreciate you for getting back to us, dranta.

 

Yes, you can create a journal entry to transfer between funds. However, to ensure that the transactions are recorded correctly, I'd suggest reaching out to your accountant. They're the best support that can guide you with the process.

 

I've added this reference as your guide in creating a journal entry: Create journal entries.

 

I'm just a post-away whenever you have concerns with QuickBooks.

L
lambdawinner
February 3, 2023

Oh no, this is a huge amount of money. Really hoping this type of problem does not occur to you ever again.

Terms & ConditionsAccessibility statement