Posting vendor payment to clear payables and receivables

Question

I have a vendor which we've started to do a lot of warranty service for & they've applied as credits to our account with them. Since warranty work was becoming very regular, I began to bill these jobs to separate from our purchases & requested they pay by our invoices. The vendor sent payment to clear both payables (-4000.00) & receivables (-2000.00) which also includes early payment discounts not included when clearing our account with them previously (I have already made an entry in payables to reflect the discounts). I'm still not sure that I entered the first payment correctly, but it appears ok. But now I have to clear all & I'm not sure how. I have gone as far as to create a contra account, which I applied the payables to but it didn't seem right to me, so I stopped there. I would be most grateful to anyone that can help direct me on this entry.

Smith and Co · Accepted Answer

You can do the same as mentioned above. First do the contras between both the vendor and the customer, then all you will have left is the receivable that the customer owes you. Acct Payable will have been cleared out to nil so no balance owing. 
 Now at this point you may want to create a sales invoice to credit for the Early Pmt Discount that is now taken on previously paid invoices - this amount will not include taxes as it is not applicable and should be coded to a revenue account called something like Early Pmt Discount. 
 Then go ahead in the Receipt journal and choose each unpaid invoice as paid but also enter the amount for early payment discount in the 'discount taken' column. You will also be including the 'Contra' amount from A/P but there will be no discount on this one since it has nothing to do with sales invoices nor will there be any discount for the warranty invoices or the 'Discount' credit invoice you just made up. In the end you should be able to reach the same total as the cheque paid to you. 
 You may want to print off an aged detail listing showing the paid invoices as well and go thru each invoice marking the discount to verify same discount taken by customer.

Sage 50 Canada

Posting vendor payment to clear payables and receivables

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