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jprinzen
June 3, 2021
Solved

Putting a depoist down for a piece of equipment that isnt available yet. How do I record that without an invoice for that equipment? Just want to record a prepayment.

  • June 3, 2021
  • 2 replies
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Original commenter did not share additional details
Best answer by Rochelley

Hello @jprinzen ,

 

I'm assuming that you mean you are purchasing a piece of equipment that isn't available yet, not that you are selling a piece of equipment that isn't available yet.  If the equipment will be available in the current fiscal year, it is acceptable to just record the prepayment in your A/P or A/R sub-ledger.

 

If you are purchasing this equipment and making a deposit, you would record as follows:

 

Create a cheque (or credit card) entry.  Enter vendor's name from your A/P list of suppliers. Enter Accounts Payable in Category.  This entry will post to your A/P ledger under this supplier name. It will show as a negative payable until you receive delivery of the equipment and an invoice from the supplier.  At that time, when you go to make payments to this supplier, this will show as a vendor credit which you can then apply to the invoice.

 

If you are buying equipment and receiving a deposit:

 

Create a deposit to your bank account.  Enter customer's name from your A/R list of customers.  Enter Accounts Receiveable in Category.  This entry will post to your A/R ledger under this customer name.  It will show as a negative receivable until you deliver the equipment and make an invoice for your customer.  At that time, when you receive payments from this customer, this will show as a customer credit and you can then apply to the invoice.

 

If this is a deposit that will cross-over year-end or the wait for the equipment is very long, your external accountant will likely rather see these amounts in a separate Vendor Deposits (other asset account) or Customer Deposits (other liability account) on the Balance Sheet.  If this is the case, you would create the necessary account and when you write your cheque or receive your payment, you would post directly into these accounts.  Even if you must do this for year-end, there wouldn't be any reason why you couldn't put them back into A/P or A/R in the new year.  It is easier to deal with then when the transaction is finalized.

 

Cheers :)

 

 

2 replies

T
Tammy_H
June 4, 2021

Hi jprinzen,

 

It's fantastic to see new members joining the conversation here in the QuickBooks Community. You'll find it's a great way to get answers to all your questions. QuickBooks Online allows for different methods of recording entries so you can use the one that works best for your business. Let me explain the options.

 

The first option is to use Accounts Payable to record prepayment. You can write a cheque to the supplier and record it to your Accounts Payable (A/P) account by:

  1. Go to the Banking menu, then select Write Cheques.
  2. Enter the supplier name, date, and the payment amount.
  3. Go to the Expenses tab. In the Account column, enter Accounts Payable.
  4. In the Customer: Job column, select the drop-down, then choose the supplier name.
  5. Select Save & Close.                                                                                                                    

Enter the bill upon receipt and apply the credit to the bill.                                                                                                                                                                                                                                     

The second option is to use an Asset account to track the prepayment.

 

You can write a cheque to the supplier and record it to an Other Current Asset (OCA) account by:

  1. Go to the Lists menu, then select Chart of Accounts.
  2. In the Chart of Accounts, right-click anywhere, then select New.
  3. From the Other Account Types drop-down, choose Other Current Asset. Select Continue.
  4. Enter Prepaid Inventory as the Account Name.
  5. Select Save & Close.                                                                  
  6. Write a cheque to your Supplier, Go to the Banking menu, then select Write Cheques.
  7. Enter the supplier name, date, and the payment amount.
  8. Go to the Expenses tab. In the Account column, select the OCA account.
  9. Select Save & Close.                                                                  
  10. Enter the bill 
  11. Go to the Suppliers menu, then select Enter Bills.
  12. Go to the Expenses tab, then select the OCA account.
  13. Enter the amount of the prepayment as a negative value.
  14. On the Items tab, enter the items. The bill will equal the balance owed after deducting the prepayment. Note that recording the bill will reduce the asset account.
  15. Select Save & Close.   

If still unsure, I suggest contacting your accountant. They're familiar with your accounts and know what the best choice for your company is. If you don't have one, don't worry. You can find one through this link: Find an Accountant.

 

Let me know if you have further questions. Have a great night!

J
JulianotJulie
June 13, 2024

I would not use the asset account since the asset at this point and time has not been received.  The first option to make check payable to vendor and using the Accounts Payable option is preferable.

R
RochelleyAnswer
June 4, 2021

Hello @jprinzen ,

 

I'm assuming that you mean you are purchasing a piece of equipment that isn't available yet, not that you are selling a piece of equipment that isn't available yet.  If the equipment will be available in the current fiscal year, it is acceptable to just record the prepayment in your A/P or A/R sub-ledger.

 

If you are purchasing this equipment and making a deposit, you would record as follows:

 

Create a cheque (or credit card) entry.  Enter vendor's name from your A/P list of suppliers. Enter Accounts Payable in Category.  This entry will post to your A/P ledger under this supplier name. It will show as a negative payable until you receive delivery of the equipment and an invoice from the supplier.  At that time, when you go to make payments to this supplier, this will show as a vendor credit which you can then apply to the invoice.

 

If you are buying equipment and receiving a deposit:

 

Create a deposit to your bank account.  Enter customer's name from your A/R list of customers.  Enter Accounts Receiveable in Category.  This entry will post to your A/R ledger under this customer name.  It will show as a negative receivable until you deliver the equipment and make an invoice for your customer.  At that time, when you receive payments from this customer, this will show as a customer credit and you can then apply to the invoice.

 

If this is a deposit that will cross-over year-end or the wait for the equipment is very long, your external accountant will likely rather see these amounts in a separate Vendor Deposits (other asset account) or Customer Deposits (other liability account) on the Balance Sheet.  If this is the case, you would create the necessary account and when you write your cheque or receive your payment, you would post directly into these accounts.  Even if you must do this for year-end, there wouldn't be any reason why you couldn't put them back into A/P or A/R in the new year.  It is easier to deal with then when the transaction is finalized.

 

Cheers :)

 

 

H
Harvey26
August 12, 2022

purchased of an asset not yet available and a deposit was made or advance payment, then it should've been a Gen journal entry or you can enter in the vendor section as prepayment (Deposit to Vendor-Current Asset) and credit CIB and/or Cash.

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