General Journal - Apply Credit from Accounts Payable to an Invoice in Accounts Receivable
We have a Supplier (Accounts Payable) who we recently had to invoice for a unrelated matter (Accounts Receivable). They have deducted the amount they owe us (Accounts Receivable) from the amount we owe them (Accounts Payable). I am trying to work out how I can apply the credit from Accounts Payable to Accounts Receivable. I know it would be a journal, but need some help with the it please
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Hi There
Contras are best recorded using a Clearing account. This is a “dummy” bank account for the purpose of receiving into/paying out of, in these circumstances.
Enter the customer’s invoice payment as normal via Receive Payment but Deposit to the Clearing account.
This account will now have these funds in it for you to use to “pay” the Supplier’s Bill from, via Pay Bills.
(In Pay Bills, make sure you select the Clearing bank account to “pay” from)
The Clearing account should then be zero unless there’s a balance remaining that they actually paid into your bank account. If this is the case, just use Transfer or a Write Chq to move the funds from there into your actual bank account, as per their deposit (if applicable) ☺️
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Thank you Shaz. I appreciate your response
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