Quicken & Other Budget/Accounting Software/Barter

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QUESTION: Still the same question about the barter account and to to contra off the payment.

Fyi, my software don't allow me to create General Ledger for AP.

In order to knock off in AR, i will need to to do separately in AR & AP. But i am not sure of the entries.

I would like to know the entries for this transactions :

A - is my company

On 11 Jan 2013 company A have make payment to company B (which is the customer and also the vendor) amount $438,072.00. And the payment for that value is the contra of :

1) Company A invoices total - $20,525
2) Company B invoices total - $451,633
3) Company C claims submission to Company A - $6,964

=> $20,525 - $6,964 = $13,561
=> $451,633 - $13,561 = $438,072

ANSWER: You company has an accounts receivable from Company B {customer }for 20525
for which you are willing to reduce this receivable to 13561

Journal entry #1

Debit Claims expense 6967 (you should put in the memo of the journal entry
         exactly what this claim was for and why you agreed to it)
         You may have a better account such as damaged inventory expense
Credit Accounts receivable  6967.00  Enter the customer's name Company B{customer }in the appropriate field


You owe to vendor Company B {vendor} $451,633
However, you want to deduct from the balance owed $13,561
Some accounting software packages, like QuickBooks, will not let you post to an
accounts receivable and accounts payable at the same time,
For example  your software may not permit the following journal entry
Debit accounts payable  13,561    vendor Company B
Credit Accounts receivable    13561  Customer company B

If this is the case, you need to split the above journal entry into 2 journal entires
and select another chart of account to post the other side each entry.  

If you do not have the permissions to set up a new bank account called barter
then select an "other expense" account to post the other 1/2 of the journal entry
use the same date on both journal entries
For example:

Journal entry 2:
Debit accounts payable  $13,561    vendor Company B  memo: offset accounts payable payment with amount owed on accounts receivable
Credit   Other expense       $13,561   

Journal entry 3:
Debit Other Expense  $13,561    Customer Company B   memo: offset account payable payment with amount owed on accounts receivable

Credit Accounts receivable    $13,561  Customer company B

Hope this helps

Linda Saltz, CPA
Advanced Certified QuickBooks Advisor
http://www.qbalance.com
We sell and support QuickBooks Enterprise
http://www.qbalance.com/enterprise_quickbooks.htm


---------- FOLLOW-UP ----------

QUESTION: I am sorry to ask this again.

According to your journal entry #1 above :
Debit claims expense - no problem
Credit AR - my software won't allow me to choose this AR. We only have one AR heading accounts that is Trade Debtors which consists all AR accounts. So please advise me how do i enter this credit for this journal.

Same goes if the other journal that required me to debit/credit AP. The software won't allow me.

The software only allows me to create a new bank account called barter. So this one is ok.

Kindly advise again the transactions journal entries.

Answer
If your software will not allow you to choose journal entries, then we
need to use a transaction type that will allow for this adjustment.

This was the first solution I proposed but it is worded differently
1. Make a partial payment on the vendor Company B bill for 13561 and
    use the bank account called barter
2. Create a credit memo on the customer Company B for 6964
   use an item on the credit memo that points to claims expense
  if one does not exist, be  sure to create the item before creating the credit memo
  apply the credit memo to the invoice for 20525
3. Receive the payment of  $13,561 ($20,525 - $6,964)
  and put that into the bank account called BARTER. Accounts receivable should now be zero
  for this customer

Barter should now be zero
and accounts payable should now be 438072  ($451,633-$13,561)

If the above does not work
You will need to set up a new item to be used on a credit memo that points to the barter
  bank account
1. Create a credit memo on the customer Company B for 6964
   use an item on the credit memo that points to claims expense
  if one does not exist, be  sure to create the item before creating the credit memo
  apply the credit memo to the invoice for 20525

2. Create a 2nd credit memo to the customer Company B for  $13561 using the item that
  points to the barter account . Apply the credit memo to the open invoice under Customer
   Company B
3. Create a credit BILL to the vendor Company B
  use the account "barter"  for $13561
  apply the credit bill to the original bill of 451633

Hope this helps

Linda Saltz, CPA
Advanced Certified QuickBooks advisor
http://www.qbalance.com
http://www.qbalance.com/enterprise_quickbooks.htm
We sell and support QuickBooks Enterprise

Quicken & Other Budget/Accounting Software

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Linda Saltz, CPA, QBalance.com

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QuickBooks best practices, troubleshooting, accounting, tax We have over 70 pages of website content about QuickBooks tips, running a business, tax and business startup at http://www.qbalance.com

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Accountant and CPA over 20 years. Specializing in accounting software for over 12 years, Certified QuickBooks Pro Advisor, QuickBooks seminar instructor since 1997.
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