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Vendors & A/P

How Many Vendor Addresses Does QuickBooks 2011 Support?

Chief Mechanic · September 19, 2010 ·

QuickBooks 2011 now supports 2 vendor addresses; prior versions of QuickBooks supported only 1.

QuickBooks 2011 Edit Vendor Window Showing 2 Addresses

The Shipped From Address field is used on vendor purchase orders. The Billed From Address is used on bills and bill credits, and this address will appear when printing a check to the vendor.

In effect, the Billed From Address is the “remit to” address, which could be a PO box. The Shipped From Address is the vendor’s physical location. The field labels should more clearly reflect these roles since this is how most QuickBooks users will treat them.

Users upgrading to QuickBooks 2011 from prior versions can now add the missing address from vendor records that have different “remit to” and physical locations.

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What’s the New Paid Stamp For QuickBooks 2011?

Chief Mechanic · September 19, 2010 ·

For QuickBooks 2011, Intuit improved the Paid stamp to reflect the date the customer invoice was paid, as shown in the screenshot below.

QuickBooks 2011 Create Invoices Window With Date Paid Stamp

Unfortunately, a Paid stamp is also applied to vendor bills, and that stamp does not reflect the date the bill was paid.

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What Is the New History Tab In QuickBooks 2011?

Chief Mechanic · September 19, 2010 ·

For QuickBooks 2011 and Enterprise Solutions 11.0, Intuit added a History tab to several key windows in QuickBooks:

  • Enter Bills
  • Create Purchase Orders
  • Create Item Receipts
  • Create Invoices
  • Create Credit Memos/Refunds
  • Enter Sales Receipts

Unfortunately, it’s not included on the Receive Payments window.

The History tab can be quickly opened and closed, and shows a Summary, Recent Transactions, and Notes for the vendor or customer.

Here’s the History tab in its closed state. To open it, just click on the left-pointing arrow.

QuickBooks 2011 Enter Bills History Tab Closed

With the tab open, you can close it by clicking on the right-pointing arrow.

QuickBooks 2011 Enter Bills History Tab

Each History tab contains intelligent links to functions that allow you to edit the displayed entity, edit notes, and prepare pre-filtered reports. For example, the Open Balance link in the Enter Bills window opens a pre-filtered Vendor Open Balance report, which is a modified Unpaid Bills Detail report for the currently displayed vendor.

By providing an easy way to display recent activity during transaction entry, the History tab will help to reduce the chance of erroneously recording a duplicate transaction.

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How Can I Close Transactions With a Customer Who Is Also a Vendor Who Only Paid the Net Balance On an Invoice?

Chief Mechanic · September 13, 2010 ·

For some businesses, another firm is both a customer and a vendor.  If you’ve invoiced that firm (as a customer) while they have billed your company as a vendor, they may opt to pay the net amount owed for simplicity and to preserve their own cash balance.  In that case, you’ll need to find a way to process the net payment and at the same time close both the customer invoice and the vendor bill.

In QuickBooks, there are 2 methods to accomplish this:

  1. Use a clearing Bank account
  2. Use General Journal entries

We favor the second method because it’s more consistent with normal workflow and it more fully documents the transactions recorded.  To mirror Intuit’s own discussion of these methods in their knowledge base article on this topic, we’ll follow their example transaction, where your firm has invoiced a customer/vendor for $100, and that customer/vendor has billed your company $75.  We’ve given this customer/vendor a name, Newco Llc.  QuickBooks doesn’t permit identical names in lists.  For that reason and to better distinguish between the customer account and the vendor account, we’ve appended “(customer)” and “(vendor)” to the company’s name.

Method 1 – Use a Clearing Bank Account

This method involves creation of a clearing account (if you don’t already have one set up) and recording the vendor credit through the Make Deposits function.  Screen shots that illustrate what takes place in important steps follow the description of the steps.

  1. Create a new Bank type account, which in our example is named Clearing Bank Account
  2. Receive the payment from your customer/vendor to pay the customer/vendor’s outstanding invoice in full, which in our example is a payment of $100, and select Undeposited Funds as the Deposit To account if it’s not already set to that by default
  3. Click on the Banking->Make Deposits menu selection and select the payment you recorded in Step 2 in the Payments to Deposit window and click Ok
  4. In the Make Deposits window, add a new line item and enter the customer/vendor’s vendor account in the Received From field, your Accounts Payable account in the From Account field, and the amount of the vendor bill that the customer/vendor deducted from his payment as a negative number, which in our example is -75
  5. Add a second new line item and enter the customer/vendor’s customer account in the Received From field, the bank account to which you’ll deposit the customer/vendor’s net payment, and the amount of the net payment as a negative number, which in our example is -25
  6. Set the Deposit To account to the clearing account created in Step 1, which in our example is the Clearing Bank Account and click Save & Close or Save & New to record the net deposit
  7. Click the Vendors->Pay Bills menu selection and select the customer/vendor’s bill to be paid
  8. Once the bill is selected, click the Set Credits button, choose the vendor credit that you created in Step 4, and click Done to return to the Pay Bills window
  9. Set the Account from which to issue the payment to the clearing account, which in our example is the Clearing Bank Account, and click the Pay Selected Bills button
  10. QuickBooks will display the Payment Summary window, advising you that the bill was paid by a credit only, so it won’t be associated with a bill payment check; click Done to complete paying the vendor bill

In a typical use of the Make Deposits function where there is 1 entry for the deposit amount from Undeposited Funds as a positive number, QuickBooks credits (reduces) Undeposited Funds and debits (increases) the bank account selected in the Deposit To field.  Positive amounts on the Make Deposits window represent credits; negative amounts represent debits.  Thus, Accounts Payable is debited (reduced) by the amount of the vendor bill that the customer/vendor deducted from his payment, and the regular bank account is debited (increased) by the amount of the net payment received from the customer/vendor.  Intuit incorrectly describes the entry made in Step 5 as a credit; it’s not – it’s a negative amount, so it’s a debit.

After completing Step 6 above, you’ve recorded the net amount of the deposit to your regular bank account.  Note that the Deposit Subtotal made to the clearing account is 0.00, reflecting its purpose to serve purely as a clearing account to close transactions.  QuickBooks will not allow setting the From Account to your Undeposited Funds account when recording the net amount being deposited in Step 5.  If you combine this deposit item with others, you’ll complicate reconciling your regular bank account.  That’s why it’s a good idea to make each customer/vendor transaction processed through the clearing account a separate deposit.  The need to separate deposits is one limitation of the clearing account method.

QuickBooks Premier 2009 Clearing Bank Account Make Deposit
QuickBooks Premier 2009 Clearing Bank Account Checking

After selecting the vendor bill in Step 7, you’ll be able to apply the credit that you created in Step 4 by clicking the Set Credits button.

QuickBooks Premier 2009 Clearing Bank Account Pay Bills 1

In the Discounts and Credits window, select the credit.

QuickBooks Premier 2009 Clearing Bank Account Discounts

After selecting the credit, there are no other credits available.  The total of the bills to be paid is 0.00.

QuickBooks Premier 2009 Clearing Bank Account Pay Bills 2

As described in Step 10, QuickBooks will display the Payment Summary window.  However, because the bill was paid entirely by a credit, it won’t be associated with a bill payment check, even one with a zero amount.  The vendor’s balance will be reduced by the amount of the payment and the bill will be marked Paid, but there won’t be a transaction recording the payment in the vendor’s transaction list in Vendor Center.  The fact that the transaction list in Vendor Center presents an incomplete record of what was recorded is another limitation of the clearing account method.

QuickBooks Premier 2009 Clearing Bank Account Payment Summary

Because there’s no bill payment check to delete or void, if you want to undo this process, you’ll need to start by deleting the deposit from the clearing account.  That will leave funds in the Undeposited Funds account and return the vendor bill to an unpaid or open status.

Method 2 – Use General Journal Entries

This method involves making 2 General Journal entries and then processing the customer/vendor’s net payment in your normal workflow.  Screen shots that illustrate what takes place in important steps follow the description of the steps.

  1. Click on the Company->Make General Journal Entries… menu selection and record a debit (decrease) to Accounts Payable for the amount of the vendor bill that the vendor/customer deducted from his payment, which in our case is $75; in the Name field for the debit, enter the vendor account name
  2. On the same General Journal entry, enter a credit for an equal amount to another account, such as the expense account used on the vendor bill, and click the Save & New button
  3. Enter a second General Journal entry with a credit for $75 to Accounts Receivable, and in the Name field for the credit, enter the customer account name
  4. On the same General Journal entry, enter a debit for $75 to the same account you used in Step 2 and click the Save & Close button
  5. Click on the Customers->Receive Payments menu selection and enter the customer account name in the Received From field; after doing so, you’ll see the message that this customer has available credits
  6. Click the Discounts & Credits… button to apply these credits
  7. In the Discounts & Credits window that appears, select the credit for $75 that you recorded in Step 3 and click the Done button to return to the Receive Payments window
  8. Select the customer invoice being paid and enter the net amount paid by the customer/vendor, along with other payment information such as the Pmt. Method and Check #
  9. Click Save & Close or Save & New to record the customer payment

The account you enter in Steps 2 and 4 doesn’t matter as long as it’s the same account, because the debits and credits reverse each other.  In fact, if you already have a clearing account set up, you can simply use that clearing account in these steps.  These 2 General Journal entries are an effort to post a debit to Accounts Payable and a credit to Accounts Receivable.  Because QuickBooks imposes a restriction that only 1 Accounts Payable or Accounts Receivable account can appear on a General Journal entry, it’s necessary to make 2 entries.

Here are the 2 General Journal entries:

QuickBooks Premier 2009 Vendor Customer 1
QuickBooks Premier 2009 Vendor Customer 2

Here’s the process at Step 5:

QuickBooks Premier 2009 Vendor Customer 3
QuickBooks Premier 2009 Vendor Customer 4

And finally, here’s our completed Receive Payments screen just before saving the transaction:

QuickBooks Premier 2009 Vendor Customer 5

We favor the second method – using General Journal entries – for 2 reasons.  First, after completing these steps, you can process the customer/vendor’s check with other checks in your Undeposited Funds account as you normally would.  You won’t need to make a separate deposit for each payment from a customer/vendor in order to maintain your bank reconciliation process as you would if you used the clearing account method.  Second, because General Journal entries appear on the transaction list in both the Customer Center and Vendor Center, you’ll have a well-documented trail of what took place.  On the vendor account, you’ll see a bill for $75 and a General Journal debit for $75 that pays the bill; on the customer account, you’ll see the $100 invoice, the $75 General Journal credit that reduced the amount owed, and the $25 payment.  In contrast, in the clearing account method, you’ll only see the vendor bill marked Paid.  You won’t see the transaction that actually paid the vendor bill, which can lead to confusion after the details of how the transaction was recorded are forgotten.

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Are There Restrictions On Making General Journal Entries To A/R and A/P Accounts?

Chief Mechanic · September 13, 2010 ·

Yes, there are a few restrictions on making General Journal Entries to Accounts Receivable (A/R) and Accounts Payable (A/P) accounts.

Normally, the preferred way to change the balance in an A/R or A/P account is by recording transactions, such as customer invoices or vendor bills. However, sometimes it’s more convenient to make a General Journal Entry.  A common use of General Journal Entries to A/R or A/P accounts is to set up customer or vendor balances in a new QuickBooks company file.

If you opt to make a General Journal Entry to an A/R or A/P account, such entries are subject to these restrictions:

  1. You can’t use more than 1 A/R or A/P account in a single journal entry
  2. You must enter a customer name for a General Journal Entry to an A/R account and a vendor name for a entry to a A/P account

Here are some of the warnings you’ll see if you attempt to violate these restrictions:

QuickBooks Premier 2009 General Ledger Warning 1
QuickBooks Premier 2009 General Ledger Warning 2
QuickBooks Premier 2009 General Ledger Warning 3

Here’s an example of a General Journal Entry to 1 A/P account that meets the restrictions:

QuickBooks Premier 2009 GL Make General Journal Entries Accounts Payable

While not an absolute requirement, QuickBooks prefers that transactions involving A/R or A/P accounts have that account on the first line of the General Journal Entry.  The first line of a General Journal Entry is the source of the transaction.  Sources and targets are an important concept in QuickBooks.  For more information, see our article on sources and targets.

When you record a General Journal Entry to an A/R or A/P account, the General Journal Entry will appear in the transaction list for the customer or vendor specified in either the Customer Center or Vendor Center – provided that the A/R or A/P account is on the first line of the general journal entry and is therefore the transaction source.  General Journal Entries that debit (increase) A/R will be similar to a customer invoice and can be paid in a similar fashion.  General Journal Entries that credit (increase) A/P will be similar to a vendor bill and likewise can be paid just like other vendor bills.  However, some data fields are not filled in when recording transactions for a customer or vendor via a General Journal Entry.  For example, the Terms and Due Date fields on a General Journal Entry for a vendor are left blank, as shown below. (Note: The single screenshot below shows a customized Vendor Center with the separate Pay Bills window placed on top of it to illustrate several of the points discussed in this article.)

QuickBooks Premier 2009 Vendor Center Plus Pay Bills

Beyond restrictions on making General Journal Entries to an A/R or A/P account, there are other restrictions that apply to making General Journal Entries, such as currency restrictions in multicurrency environments.

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