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…
- Create a Purchase Order for the items
- Create another current asset account, name it “Prepaid Inventory,” or something similar
- 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.
- 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.
- Save the transaction
To receive the items
- Find the check or credit card transaction you created above
- On the Expenses tab, select the line that contains your current asset account created earlier
- Go to the Edit menu and click Delete Line
- Click on the Items tab
- Click Select PO
- Click the purchase order you created in the ordering steps above and then click OK
- 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
- Save the transaction