Discover the Ultimate 50 Advance Payment Invoice Format for Operations

50 advance payment invoice format for Operations

and now we will learn the last type of vendor  and payable transaction that you need to know   about prepayments which means advance payments  to vendors for products and services that we   will receive in the future there are different  situations that would require us to pay a vendor   before we get the product or the service that  we're paying for and therefore there are different   methods or different ways to record these pre  payments into QuickBooks the method that I am   showing you in this particular video is called  the check to accounts payable method for good side   about this method is that the vendors balance  is always correct and your vendor records are   correct to the last detail at any given moment so  if your priority is making sure that your vendor   records are correct this is the method that you  should use however there are two downsides to this   method the first bad thing about this method is  that total accounts payable in the trial balance   is not accurate that's because the vendor that  you pay in advance will have a negative balance   and that will offset the total accounts payable  and you will not know the total money that you   owe to all the other vendors the other downside  to this particular method is that there is no   account in the chart of accounts or the trial  balance showing total prepaid expenses or all   the money that you paid in advance for services  and products that you're waiting to receive if   your chart of accounts and your trial balance is  more important to you than your vendor records   then I suggest you do the method that will  be shown in the video that will follow this   one for example on May 14th we paid OfficeMax 500  dollars in advance for three future deliveries of   supplies and we paid them with check number one  six six one well what's going to happen if we   record this transaction under the method we're  using cash will go down because we just paid a   vendor accounts payable will actually go down  because when you pay a vendor accounts payable   decreases and that particular vendors balance will  go negative the vet the individual vendors balance   will be correct and if you look at the vendor  reports like the vendor balance detail or the   unpaid bill it will show the correct amount for  that vendor so let's go back to the transaction   and see how to record it from the main menu click  banking write a check now the money is coming from   the bank account okay and it's going to accounts  payable so the cash and bank with the where the   money is coming from should be the account in the  top of the window and accounts payable should be   the account on the bottom of the window it was  checked number one six six one the date was back   on May 14th and the money amount is five hundred  and the vendor was OfficeMax so now we have all   the information we need when we actually pay for  the deliveries in advance now you have to use you   have to make strong use of the memo field because  all the other relevant information can only go   in the memo field in advance payment for three  deliveries of office supplies and you could put   any other detail you want and booting the expected  delivery date now when you click Save and close   you can double check your trial balance to see  that this was the very last transaction here it   is May 14th the very last transaction recorded  in cash and bank and that you can see it brings   cash and Bank down by $500 maybe you can't see  it brings cash and Bank down by $500 and you   could also see if you double click account payable  that this very same transaction check number 1 6   6 1 brings down account payable on May 14th with  the memo in advance payment and it's a debit to   account payable of $500 but the most important  thing is looking at the vendor reports when you   look at the office max report unpaid bills shows  a negative 500 if it's a negative unpaid bill it   means they owe us and if it's on the unpaid bill  report it means it's still owed and still open   now here's where the interesting part comes in  May 16th received the first supply delivery from   office max we receive $200 worth of supplies and  they sent us a paid bill with this bill number   well when you actually receive the product or  service that you paid in advance for there are   two steps first enter the bill normally the  way you would whether it was a paid bill or   not secondly use the pay bills window to apply the  in advance payment credit that we recorded on May   14th apply that to the bill you just entered  then the vendor records will be perfect and   correct now if you record it that way supplies  will go up because we physically receive $200   more of supplies and accounts payable will go  up because we just received from a vendor the   vendor we'll be correct and the reports will be  accurate so let's go back to those steps and let's   see how to record it from the main menu click  vendor enter bill choose OfficeMax the vendor   the date that we received the merchandise with  the bill is the 16th and it's eight seven eight   seven six the amount of the bill is the amount  that we physically received of office supplies   and the expense what we physically received is  supplies so this is the way we would enter the   bill whether the bill was a paid bill or not soon  as we click Save and close we can open the unpaid   bills detail and we can see that OfficeMax now  has the correct balance of owing us three hundred   dollars in future supplies and we can see that  the reason why they owe us is that we pay them   five hundred on May 14th and then they delivered  the merchandise with a bill on May 16th so this is   what the unpaid bills would look like the vendor  balance detail same thing the balance was five   hundred they delivered two hundred and now they  only owe us $300 worth of supplies now what's step   two step two is go to the pay bills window and  set the bill and the check together so that they   cancel each other out and the unpaid bill report  looks appropriate from the main menu click vendor   pay bills make sure you choose OfficeMax notice  there's only one bill and QuickBooks doesn't yet   know it's paid but we're gonna tell it now if  you only click on the row you're not able to   click set credit you have to actually click in  the box to be able to get the set credit button   now you only have one transaction for OfficeMax  that's listed as a credit because we only receipt   we only paid OfficeMax once so QuickBooks knows  that this check number one six six one is a $500   credit against OfficeMax account since it's the  only credit on the list QuickBooks automatically   checked it so we're applying this 500 to the two  hundred dollar payment we click done and we notice   the amount to pay goes down to zero when we click  pay selected bill and click done for the pop-up   now when you look at the unpaid bill report it  is perfectly accurate and the only thing that it   shows is a remaining $300 unpaid by office max to  us for the supplies we will receive in the future