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username185771
October 16, 2018
Solved

How do I create a journal entry to offset a credit in A-P?

  • October 16, 2018
  • 3 replies
  • 0 views

In mid 2016 we received a credit memo from a vendor which was entered into A-P. 

On March 30, 2017 that vendor  issued a refund check for the amount of the remaining credit balance.  I entered a journal entry that debits the expense account with the vendor name and credits A-P payable with the vendor name so the credit memo in this vendor account should be gone (washed out to 0.00).  

When I try to add these under the vendor to wash it out and create a 0.00 balance it tells me there is an error somewhere.  How do I fix this journal entry and then remove the debit and credit in the vendor?

Thank you!

Best answer by qbteachmt

You don't use JE for AP. You already have the AP credit. It is time to process the Refund as a Deposit, not Expense = AP; you have the condition of funds to Bank = AP refund. You are offsetting this to the wrong account. The Vendor Credit should show the reversal of the Expense already, and that is why it created a negative AP for that vendor name. Deposit to Bank = "AP" for that same Vendor Name. That way, paying bills allows you to apply the refund deposit to the open vendor credit.

3 replies

qbteachmt
qbteachmtAnswer
October 16, 2018

You don't use JE for AP. You already have the AP credit. It is time to process the Refund as a Deposit, not Expense = AP; you have the condition of funds to Bank = AP refund. You are offsetting this to the wrong account. The Vendor Credit should show the reversal of the Expense already, and that is why it created a negative AP for that vendor name. Deposit to Bank = "AP" for that same Vendor Name. That way, paying bills allows you to apply the refund deposit to the open vendor credit.

A
arkvalleyinfo
October 16, 2018

To expand on the previous answer, just go to deposits, enter your vendor name and use "AP" as your account.  Once done, you can go to "Pay bills".  Then, under that vendor will show your deposit as a "bill", and you can zero it out with the credit that is sitting there....

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shelley11_2
March 26, 2020

Thank you!!!!!

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berrymanroofing
July 14, 2022

I have a similar issue. I have a vendor with a credit balance but owe this vendor 0 nor did this vendor overpay. I am unable to locate anything that would indicate a credit balance reason all invoices balance to checks disbursement. Is there a way to clear the credit balance without affecting my accounts payable or bank. JBerryman

KlentB
KlentB
July 14, 2022

Hi there, berrymanroofing.

 

You can create an appropriate journal entry to clear the credit balance of your vendor. If you're unfamiliar with the process, you may consult an accounting professional before trying this. Here's how:

 

  1. Click the + New button.
  2. Choose Journal entry.
  3. Select the Account field and pick Accounts Payable from the dropdown list.
  4. Enter the amount under the Credit column, then select the vendor name in the Name column 
  5. In the next line, select the offset or clearing account, them=n enter the amount under the Debit column.

I've also included this article to learn how to enter a prior balance for a customer that owes you money or a vendor you need to pay: Manage outstanding balances for customers and vendors in QuickBooks Online.

 

Drop me a comment below if you have any other concerns or additional questions. Have a good one.

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lynnP2
March 13, 2023

Hi Moderator, 

I have a similar situation. I received a credit memo from vendor and put it in QB. 
Then later, they said it was issued by mistake. So, I have to offset it. 

I followed your instruction to create a JE that reversed the credit memo. 
But then I did another step to offset the positive and negative amounts. 
I click New then click Pay bill. 
The I click the box for JE and click to box for credit and check to make sure that the payment amount is zero. 
Then save. 
Is that correct? LP

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