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Entering vendor prepayments or deposits for prepaid parts or services

When you order a part or a service from a Vendor, the Vendor may require you prepay a portion of the price before delivery. You can enter the prepayments, or deposits, in two ways:

  1. Write a Check to the Vendor and record the check to your Accounts Payable (A/P) account, decreasing the balance until you are ready to enter the final bill.
  2. Write a Check to the Vendor and record the check to an Other Current Asset (OCA) account, increasing the balance until you are ready to pay the final bill. 

Consult your accounting professional about which option is best for you.

Using Accounts Payable to enter the prepayment
  1. Create a Check for your Vendor.
    1. From the QuickBooks Banking menu, choose Write Checks.
    2. Fill out the top part of the check with the vendor name and the amount of the payment.
    3. On the Expenses tab, enter Accounts Payable in the Account column. The amount should fill in for you.
    4. Enter the vendor name in the Customer:Job column.
    5. Click Save and Close.
       
  2. Enter the Bill:
    1. When the items arrive, either receive the items on a bill, or enter an item receipt (if entering the bill later).
       
  3. Apply the prepayment to a bill
    1. From the Vendors menu, choose Pay Bills.
    2. You may want to choose Vendors in the Sort Bills By drop-down list, and select the option to Show all bills.
    3. Highlight the bill you want to associate with the prepayment.
    4. Click Set Credits.
    5. The prepayment will display in the Set Credits screen. Assure it is checked and click Done.
    6. If there is a balance due on the Bill, QuickBooks will create a Bill Payment Check.
       
Using an asset account to track the prepayment
  1. Create an Other Current Asset (OCA) account to track prepayments:
    1. From the Lists menu, choose Chart of Accounts.
    2. Right-click in the list and then click New.
    3. From the Type drop-down list, choose Other Current Asset.
    4. Enter a name, such as Prepaid Inventory.
    5. Click OK.
       
  2. Create a Check to your Vendor:.
    1. From the Banking menu, choose Write Checks
    2. Fill out the top part of the check with the vendor name and the amount of the prepayment.
    3. On the Expenses tab, enter the OCA account from Step 1 in the Account column. The amount should fill in for you.
    4. Click OK.
       
  3. Enter the Bill.
    1. When the items arrive, from the Vendors menu, choose Enter Bills.
    2. On the Expenses tab, select the OCA account.
    3.  Enter the amount of the prepayment as a negative value.
    4. On the Items tab, enter the items. The bill will equal the balance owed after deducting the prepayment and recording the bill will reduce the asset account.
    5. Click OK
       
  4. Pay the balance of the Bill.
    1. From the Vendors menu, choose Pay Bills.
    2. You may want to choose Vendors in the Sort Bills By drop-down list, and select the option to Show all bills.
    3. If there is a balance due after the prepayment is applied, QuickBooks will create a Bill Payment Check  for the balance. 

Create a custom report to view existing prepayments:

  1. From the Reports menu, select Vendors & Payables > Vendor Balance Detail
  2. Choose Modify/Cusomize report, and then select the Filters tab
  3. From the Account drop-down list, choose the asset account created to track prepayment amounts.
  4. Choose the Display tab, and select the desired date range for the report
  5. Click OK.
     

If this solution does not resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free, or you can contact a technical support agent for additional guidance. Fees may apply.

KB ID# HOW13051
11/23/2014 2:01:44 PM
PPRDQSSWS401 9102 Pro 2013 f09b38