Process To Write Off Customer & Vendor Balances

Write off customer and vendor balances 

The user may experience problem with small balances resulting errors like overpayment or underpayment. Due to this more time and materials are used to collect or pay the amount due rather than clearing the accounts on time.
There are two ways to remove the amounts, but don’t forget to consult your accounting professional before trying any of these steps-

Option 1: Create a General Journal Entry to write off the amount 

 

  1. Create a journal entry.a.  Select Make General Journal Entries from the Company menu.

    b. Change the date and fill in the entry number from the Make General Journal Entries window if necessary.

    For Customers With Over Payment-
    1. Select the Account field and select Accounts Receivable from the drop down list.

    2. Enter the amount under Debit column, tab to the Name column and select a Customer Name from the drop down list.

    3. Select the offset account and enter the amount under Credit column.

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    For Customers With Under Payment-
    1. Select the Account field and select Accounts Receivable.2. Enter the amount under Credit column, tab to the Name column and select a Customer Name from the drop down list.

    3. Select the offset account and enter the amount under Debit column.

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    c. Select Save & Close.2. Apply the Existing Credit/Debit from General Journal Entry .

    a. Select Receive Payments from the Customers menu.
    b. Input the customer’s name in Received Form field.
    c. Select invoices and choose Discounts & Credits.
    d.  Select the available credit from the Credits tab and press Done.
    e. Click Select and Save.

    Acoounts Payable-

    1. Create a Journal Entry.

    a. Select Make General Journal Entries, from the Company menu.

    b. Change the date and fill in the entry number from the Make General Journal Entries window if necessary.

    For Vendor with Over payment.
    1. Select Accounts Payable from the Account field drop down list.

    2. Select the Vendor’s name from the drop down list in Name Column after entering the amount under the Debit column.

    3. Choose the offset account and input the amount under Debit column.

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    For Vendor with Under Payment.1. Choose Accounts Payable from the drop down list in Account field.

    2. Select the vendor’s name from the drop down list in Name column under the Debit column.

    3. Select the offset account and enter the amount under Credit column.

    4.  Click Save and Close.

    2. Apply the journal entry to the existing debit/credit.

    1. Select Pay Bills from the Vendors menu

    2. Select the bill and choose Set Credits.

    3. Under Credits tab, select the available credit and click Done.

    4. Select Save & Close.

    Option 2: Use Discounts to write off small amounts

    * Create an account and item to use when writing off small amounts.

    1. Create a Charge off Account.
     

  1. Select Chart of Accounts From the Lists menu,  
  1. Choose the Account button and Select New. 
  1. Choose Income then Continue. 
  1. Input Minor A/R and A/P Charge-Off in the Account Name field and select Save & Close. 
  1. Create a Charge-off item. 
  1. Choose Item Lists, from the Lists menu,  
  1. Choose the Item button and choose New. 
  1. Choose Other Charge as Item Type and click Continue. 
  1. Input Minor Charge-Off in the Item Name/Number field. 
  1. Choose Non-Taxable Sales in the Tax Code field. 
  1. Choose Minor A/R and A/P Charge-Off in the Account field. 
  1. Click OK to save and create the item. 

* Select the small amount that you want to clear out.

1.  Customer Underpayment

a. Select Receive Payments from the Customers menu.
b. Select the name for the customer in Receive from field.
c. Choose the invoice that you want to write off the amount.
d. Click on Discounts and Edits.
e. Click on the Discount tab-

1. Input the amount you want to enter in Amount of Discount field.
2. From the Discount Account field Select Minor A/R and A/P Charge-Off.
3. To close the Discount and Credits windows, click on Done.

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4. To close the Receive Payments window, click on Save & Close.

Customer Overpayment.

1. Choose Create Invoices from the Customers menu.
2. Input the name of the customer in the Customer:Job field.
3. Choose Minor Charge-Off in the item field and enter the amount you want to input in the over payment option.
4. Click on Apply Credits.

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5. Select the Credit in the section named as Available Credits.
6. To close the Apply Credits windows, click on DONE.
7. To close the Create Invoice window, click on Save & Close option.

Vendor Underpayment

1. Select Pay Bills from the Vendors menu.
2. Choose the bill with the balance that you need to write off.
3. Click on Set Discount.
4. Click on the Discount tab.
a. Enter the discount amount in the Amount of Discount field.
b. From the Discount Account field, select Minor A/R and A/P Charge-Off .
c. To close the Discounts & Credits window click on Done.

5. To close the Pay Bills window, click on Pay Selected Bills.
6. Click on Done in Payment Summary window.

Vendor Overpayment

1. Input the Bill amount that will overset the credit.
a. Select Enter Bills from the Vendors menu.
b. Select the Vendor in the Vendor Field.
c. Select Minor Charge-Off in the Item field, from the Items tab.
d. Select Save & Close.
select Minor Charge-Off in the Item field.2. Apply the available credit in the bill that you created.
a. Choose Pay Bills from the Vendors menu.
b. Click on the bill that you want to credit.
c. Click on Set Credits.
d. Select the credit from the Credits tab.
e. To close the Discount & Credits window, click on Done.
f. To close the Pay Bills window, click on Pay Selected Bills.
g. In the Payment Summary window, click on Done.
 

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