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Vendor Credit Invoices and Class Balancing

Forum|Forum|4 years ago
January 11, 2022
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Upon running Balance Sheet by Class (Cash Basis), I was able to determine that CREDIT Invoices applied against a vendor check are affecting the Balance Sheet by "unbalancing the classes".

Vendor Credits are entered in the same manner as Vendor Bills (except using the "Credit" option). All items are exactly the same (class coding, etc). Shouldn't the Accounts Payables Balance wash in the end once the credit is applied?

Vendor Bill: DR Expense CR Accounts Payable (class listed on both parts)

Pay Bill: DR Accounts Payable CR Cash (class listed on both parts)

Net Result would be: DR Expense CR Cash

Vendor Credit: DR Accounts Payable DR Expense (class listed on both parts)

Apply to Vendor Payment: DR Cash CR Accounts Payable (class listed on both parts)

Net Result would be: DR Cash, CR Expense

Why would my classes still be out of balance?

Best answer by NNeese

This solution corrected the B/S by class... but upon time to reconcile, there was nothing to apply against the Bank activity. Therefore, the GJE was voided and this is the best (not always easiest) way to correct an Vendor Invoice CREDIT applied against an incorrect class.

Error Example:

Vendor Invoice - Class A

Vendor Credit - Class B

Vendor Credit attached to invoice upon payment

1) First you will have to determine the invoices and check affected by this transaction.

2) You will have to Remove the affected Invoices from the Check (go to the Check and Uncheck and save). this would include the invoice that the credit was applied against AND the invoice in which you want to actually apply the credit to.

3) Next, go locate the Credit, choose Transaction History and "Edit" option. Change the Credit to a Bill and save. Then go back in and change it back to Credit and save. (this removes the credit from the original invoice)

4) Next, go to Pay Bills and attach the CREDIT invoice to the appropriate invoice (set credits option). Then exit or close. I will assume you are wanting to cut a check. Just select "DONE".

5) Go locate the Invoice (netted with credit) in your Vendor "Bill Payments" (go to Vendor Center and use drop down "Bill Payments"). You will see it with no Check Number. Update the Check Number with the Original Check Number the invoice was paid on (the check that had the issue). Be sure to use the SAME DATE as the Original Check Number as well.

6) When you go to reconcile the Check to the Bank Statement, you will see more than one part for the same Check Number. (but they should total the same unless something is missing in your reallocating the credit).

Hope this helps others who have to categorize by Class and use a same vendor!

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NNeeseAuthor

I believe i have found my own answer. Credit Invoices were randomly being applied to any invoice that was awaiting payment for the vendor. As we have several Classes, I have to inform my staff to only apply a Credit Invoice against a same Class invoice for that vendor.

Corrected by the following

DR Correct Bank Account and Class

CR Incorrect Bank Account and Class

Just a note for anyone else who has class issues:

Unpaid Bills report does pull in credits when exporting the report for check run balancing prior to making payments. it is very useful to know whether you have included all credits you intended.
Check Detail Report Displays Net paid (includes credit amounts) but does NOT include the Credit itself on the detail unless you manipulate. If you take the difference between the Check Paid Amount and the Original Amount, that is usually our credit amount.

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NNeeseAuthorAnswer