QuickBooks® – Pay For Items When You Order Them

We recently converted one of our clients from a different accounting system; where things are done quite a bit different than they are in QuickBooks®.  Once we got them up and running, they went off on their merry way.  It wasn’t long however, before we realized that we need to spend a little time on training.  Prepaying for an order is quite a different process in QuickBooks® than in their previous system, in order to do this properly here is what you need to do…

  1. Create a Purchase Order for the items
  2. Create another current asset account, name it “Prepaid Inventory,” or something similar
  3. Enter charges for the item, either by writing a check or entering a credit card charge.  When QuickBooks® identifies open purchase orders for the vendor, do not select the purchase order.
  4. On the Expenses tab of the check or credit card charge, click the Account field.  Choose the current asset account that you created in step 2.
  5. Save the transaction

To receive the items

  1. Find the check or credit card transaction you created above
  2. On the Expenses tab, select the line that contains your current asset account created earlier
  3. Go to the Edit menu and click Delete Line
  4. Click on the Items tab
  5. Click Select PO
  6. Click the purchase order you created in the ordering steps above and then click OK
  7. If necessary, record additional expenses on a new check or credit card charge.  Don’t add additional expenses to the existing check or credit card charge
  8. Save the transaction