General Journal - Apply Credit from Accounts Payable to an Invoice in Accounts Receivable

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) ☺️