Vendor payment deducted from milk check

[FlagshipTech]

[Moved here from email support...]

I have a question regarding a payment to a vendor that is deducted from our milkcheck. I do a deposit and for that line put the account as A/P listing the vendor to whom it goes. The problem I am having is those payments are showing up in the unpaid bills detail and not showing up as expenses as they should. I can't figure out how to clear those payments out of unpaid detail.

Also, am I making that entry improperly and causing that to happen?

Thank you,
Pam Nash

[FlagshipTech]

Pam,

Yes, the way you're making that Deposit entry may be causing the problem. Since the vendor payment has been deducted from your milk check it is already paid, not a payable (A/P). Recording it as a payable instead of an expense is what makes those deductions show up in Unpaid Bills.

But I'm having problems with what you've described... I can't get QuickBooks to accept a Deposit entry with A/P as a target account. (I didn't think QB would allow that, and I've just now checked to be sure. But please reply with the QuickBooks version you are using, so I can test this on the same version you use.)

So are you actually deducting the vendor payment on a Deposit or on some other QuickBooks form? (However, I don't believe Sales Receipts accept A/P items either.)

By the way, if you have The QuickBooks Farm Accounting Cookbook™ (http://www.goflagship.com/products/cbkhome.htm) the Sales Receipt screen shot on p. 218 shows an example of how your entry needs to appear: it's similar to the way you need to enter your Deposit lines, in that it enters a gross payment amount less several deductions.

As for the Deposits you've already made, let's figure that out after you reply with your QuickBooks version. Also a screen shot of one of your filled-in Deposits in QB might really help.

(For help with creating a screen shot: http://www.goflagship.com/forums/showthread.php?t=183).

Mark Wilsdorf
Flagship Technologies, Inc.
QuickBooks™ Add-Ons and Solutions You Can Use
http://www.goflagship.com

[penash]

I am using QB Pro 2009. I enter milk checks as deposit instead of cash sales. I put vendor name in Received from column and A/P in account field and enter amount paid to the vendor as negative dollars.

How should I be handling these transactions so they will be credited to the A/P and show up on year-end reports?

Is there any way to correct transaction already done this year without undoing bank reconciliations?

[FlagshipTech]

Glad to see that forum access is working for you now...

It would seem to me that if you're recording a negative-dollar line in a Deposit it should not be a payable--not posted to A/P at all, but rather to the appropriate Expense account. In other words, you are "paying" the amount directly from gross proceeds for the milk you sold, so it isn't something you want to see in A/P; you've already "paid" it directly from the Deposit.

Forgive me if I'm a bit "dense" about milk checks & deductions. If this explanation doesn't seem to suit your situation, reply back with more detail on why you need this amount to appear as a payable (A/P)--which is a bill you'll pay later--when you're deducting in on a Deposit.

A screen shot of your Deposits window, or even typing an example Deposit in your reply, would probably help.

Mark Wilsdorf
Flagship Technologies, Inc.
QuickBooks™ Add-Ons and Solutions You Can Use
http://www.goflagship.com

[penash]

Sorry, Mark, if my question is confusing. What we have is an automatic payment that comes out monthly from milk check, paid directly to vendor on account. I don't want it to be an A/P, but rather a payment to vendor to reduce my A/P. This negative A/P entry (with the deposit entry) I'm making is showing up in unpaid bills listing. I was assuming it would lower that vendor's account.

I'm sorry...I had no luck with doing a print screen.

[FlagshipTech]

Oh, I see. Try something like this...

(1) Set up a new account--let's call it Unapplied Vendor Credits, and make it an Other Current Asset account type. Having one account works if you're handling just one vendor; if you're needing to do this for several types of deductions, I would prefer setting up one master Unapplied Vendor Credits account, and a separate subaccount for each vendor (XYZ Company), so you can just look at the QuickBooks Chart of Accounts window to get any vendor's current credits balance.

(2) When you enter a Deposit, post the deduction line to your Unapplied Vendor Credits:XYZ Company account.

Doing this, you'll accumulate the deductions in Unapplied Vendor Credits:XYZ Company. Before preparing a Balance Sheet you'll want to bring your XYZ Company's A/P balance current, which you do by applying the accumulated amount from the Unapplied Vendor Credits:XYZ Company account as a Credit Memo.

(3) To enter a Credit Memo: Open the Pay Bills window, select Credit to make it a credit memo, and on the Expenses tab enter the current balance you've accumulated in Unapplied Vendor Credits:XYZ Company. Save & Close the form, and then in the Chart of Accounts window notice the balance for Unapplied Vendor Credits:XYZ Company...it should be 0 if you applied the enter balance in the credit memo.

(4) Finally, you need to apply your credit memo to outstanding Bills for XYZ company. Open the Pay Bills window, select a bill from XYZ company, then click on the Set Credits button and select a credit amount(s) to apply. When you're done, click on Pay & Close in the Pay Bills window.

At this point, your milk check deductions have been applied to XYZ's invoices (bills).

By the way, all this of course assumes you're entering Bills for invoices you receive from XYZ Company (or, I don't know, maybe you get a notation of charges from your milk coop...). In any case, you need to enter Bills for the services you receive, so that applying Credit Memos to them eventually offsets the amount you owe.

Does this make sense?

Mark Wilsdorf
Flagship Technologies, Inc.
QuickBooks™ Add-Ons and Solutions You Can Use
http://www.goflagship.com

[penash]

Thank you, Mark. That makes sense. I can do that process in cash sales also, correct? That is the way I should be doing my deposits?

Is there anyway to clear out previous entries that I did improperly, that are "hanging out" in unpaid bills?

Thank you,
Pam

[penash]

Mark-

I figured out how to clear/apply those negative A/P, or unpaid bills. I just had to go in and apply the credits and everything is fixed!

Thank you for all your help!

Happy Holidays!!

[FlagshipTech]

> I can do that process in cash sales also, correct?

Yes, you'd just need to set up Items corresponding to the Accounts I described.

> That is the way I should be doing my deposits?

It's really your choice. The advantage of using Sales Receipts is that you can record quantities more easily. (With our ManagePLUS for QuickBooks (http://www.goflagship.com/products/mphome.htm) add-on you can record quantities directly in deposits and get reports on them--like lbs. of milk sold, etc.--as described here (http://www.goflagship.com/products/mpspectopics1.htm).)

> Is there anyway to clear out previous entries that I did improperly, that are "hanging out" in unpaid bills?

Sure.

If I understand what you've been doing, and you have entered Bills for the services provided, those A/P "deduction" entries you've put on Deposits should be available in the Pay Bills window. I just tried this...

Open the Pay Bills window, check-mark a bill from that Vendor to select it for payment. The deductions you entered should now be available as available Credits...you can Set Credits to select them for offsetting the bill amount.

Oops...it occurs to me that maybe you *could* be entering Deposits just as you always have. So long as you properly identify the Vendor on the deduction line, then those deductions should be available in Pay Bills, after you select a bill for payment.

Mark Wilsdorf
Flagship Technologies, Inc.
QuickBooks™ Add-Ons and Solutions You Can Use
http://www.goflagship.com