This is called a barter transaction. In order to offset an amount due to a vendor with the amount that they owe you, do the following in QuickBooks:
- Set up a clearing account. Go to Lists > Chart of Accounts, right click and choose New
- Choose a bank type account and call it Clearing Account
A clearing, or wash, account is used to process unusual accounting transactions. It should always have a zero balance because transactions should go in and come out (wash).
- Go to the Pay Bills window, Vendors > Pay Bills
- Select the bill. If only a partial amount is being traded, enter that in the Amt. To Pay column.
- Near the bottom, change the payment account to the Clearing Account and click Pay Selected Bills
- Next, go the Receive Payments window, Customers > Receive Payments
- Receive payment for the outstanding invoice in the amount needed (same as used to pay vendor bill), use Trade or Barter for the check number
- Go to the Make Deposit window, Banking > Make Deposit
- Deposit the “payment” into the Clearing Account bank account
Voila! You have correctly recorded the income and expenses. The clearing account should be zero after this transaction.
Click the pictures to enlarge.
I hope this has helped! I would love to hear from you so leave a comment, ask a question, or just say “Hi”. Please share this or post a review for me: Google or ProAdvisor
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{ 2 comments… read them below or add one }
Reesa,
Thanks so much for this. I have a new client who has some bartering, so this is extremely helpful to me.
You are very welcome Patti! Thank you for commenting