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Old bill needs to be cleared out of QBO because it was cancelled by the vendor

Forum|Forum|2 years ago
March 7, 2024
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Hi. I have a client that has an old bill that was cancelled by the vendor. The vendor then issued a new one that wasn't entered in the 2022 books. The original bill had a payment applied to it. The vendor applied the payment to the new bill. At the end of 2022 the vendor merged with another company so the balance of the bill is being paid to the new company with a different EIN. How do I clear out the original bill from 2022 without causing issues for the 2022 taxes? Also do I just enter the balance under the new company as the original payment was paid to the old company?

QuickBooks Online

Best answer by Rainflurry

@moericki

Create a Vendor Credit for the full amount of the old vendor's bill and assign the same account(s) to the credit that was on the original bill. Date the credit memo in 2023/2024 depending on when you want the credit to post. Then, apply as much of the credit as needed to close out the old vendor's bill. Now, you still have the payment amount made in 2022 as a vendor credit for the old vendor. Transfer that credit to the new vendor by making a journal entry: debit A/P for the new vendor and credit A/P for the old vendor. Finally, for the old vendor, close out the remaining credit against the A/P that was transferred to the new vendor by going to New > Pay Bills. You should now have a credit with the new vendor for the same amount as the payment to the old vendor and the old vendor's bill should be closed with no effect on 2022's books.

M

Maybelle_S

Hello there, moericki.

I understand the complexities involved in handling the old bill that was canceled by the vendor and subsequently replaced with a new one. I'm here to assist you in addressing it effectively.

Unfortunately, we can't clear or void the old bill as it pertains to a previous period, and altering it could impact your tax reporting. To ensure accuracy and compliance with 2022 taxes, enter a negative balance for the vendor in the new company to reflect the existing payment.

Also, Yes. Entering the balance under the new company aligns with the merger and ensures accurate transaction history, maintaining transparency and complying with tax requirements.

Additionally, you may open this article to view details on how to run a particular report that will reflect all payments made to vendors: Run a report with vendor totals.

Moreover, I'd recommend reconciling your accounts every month to detect errors and monitor the growth of your business. It also contains information on how to edit completed reconciliations.

Tag me in your reply if you have other questions about vendor bills in QuickBooks. I'm more than happy to work with you again. Keep safe!

M

moerickiAuthor

How do I clear out the old bill so it doesn't show as an open balance for the previous company name?

M

moerickiAuthor

I know I can't technically clear or void it in the original bill but I need to reflect that there isn't a balance. JEs are not an option and if I credit the vendor then when I try to attach in the pay bill section I don't have an account (bank, credit card, etc) to apply it to

RainflurryAnswer

@moericki

Create a Vendor Credit for the full amount of the old vendor's bill and assign the same account(s) to the credit that was on the original bill. Date the credit memo in 2023/2024 depending on when you want the credit to post. Then, apply as much of the credit as needed to close out the old vendor's bill. Now, you still have the payment amount made in 2022 as a vendor credit for the old vendor. Transfer that credit to the new vendor by making a journal entry: debit A/P for the new vendor and credit A/P for the old vendor. Finally, for the old vendor, close out the remaining credit against the A/P that was transferred to the new vendor by going to New > Pay Bills. You should now have a credit with the new vendor for the same amount as the payment to the old vendor and the old vendor's bill should be closed with no effect on 2022's books.

M

moerickiAuthor

Hi again. So I created the credit but it still shows the bill as open in the vendor account. It doesn't show an open balance but still shows it as overdue. Usually I would just do a JE from AP to retained earnings but it still is showing everything as open. I can't credit the new vendor what was paid as it was paid to the first vendor. I separated the new bill between the old and new vendor name and applied the payment to the first and the open balance to the new. Is there not a way to zero out the old invoice as being overdue from the vendor?

Rainflurry

@moericki

"So I created the credit but it still shows the bill as open in the vendor account. It doesn't show an open balance but still shows it as overdue."

You need to create a vendor credit for the old vendor for the full amount of the original bill (not just the payment amount) and then apply it to the bill. That will close the bill.

"Usually I would just do a JE from AP to retained earnings but it still is showing everything as open. I can't credit the new vendor what was paid as it was paid to the first vendor."

After you apply the credit to the old vendor's bill, you will still have a credit amount equal to the original payment. Create the journal entry as mentioned in my previous post. That moves the credit from the old vendor to the new vendor. You can now apply the amount paid to the old vendor to the new vendor's bill.

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