Credit on an account payable

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GSA Candace
Posts: 8
Joined: Sun Dec 27, 2020 2:02 pm

Credit on an account payable

Post by GSA Candace »

Last year our hot water tank sprung a leak and we had to pay for several gallons of wasted water. We applied for an adjustment based on our average actual usage and now we've just had a huge credit applied on our water bill. It's not income so how do I enter that? Do I just enter a negative number in the expense account? Thanks.

NeilZ
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Joined: Wed Oct 08, 2003 12:20 am
Location: Monett MO
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Re: Credit on an account payable

Post by NeilZ »

GSA Candace wrote:
Tue Apr 20, 2021 4:47 pm
Last year our hot water tank sprung a leak and we had to pay for several gallons of wasted water. We applied for an adjustment based on our average actual usage and now we've just had a huge credit applied on our water bill. It's not income so how do I enter that? Do I just enter a negative number in the expense account? Thanks.
I wouldn't worry about it. Just wait until the next bill and pay any amount that is left after the credit. Its not as if you're not going to use the water this year.

There's no way you can actually credit any account, as you didn't receive any cash back.
Neil Zampella

Using PC+ since 1999.

GSA Candace
Posts: 8
Joined: Sun Dec 27, 2020 2:02 pm

Re: Credit on an account payable

Post by GSA Candace »

It was a huge credit - with covid and no-one using the building it will take almost 2 years to use up the credit. Do I just not record anything for the water bill in all that time?

NeilZ
Posts: 9477
Joined: Wed Oct 08, 2003 12:20 am
Location: Monett MO
Contact:

Re: Credit on an account payable

Post by NeilZ »

GSA Candace wrote:
Wed Apr 21, 2021 8:43 am
It was a huge credit - with covid and no-one using the building it will take almost 2 years to use up the credit. Do I just not record anything for the water bill in all that time?
Well, if its that large, you can create a liability account for the amount. I suspect it would have to be an Out Of Balance (OOB) type of entry as you have nothing to balance that initial entry against.

That would require you to DEBIT the liability:

01-2341-000 Water Credit Balance DEBIT 10000

You can look up OOB in the manual for more information about these type of entries. They should not be used normally, but in this case it may be required.

Then when you receive a Water BIll, you would create the Invoice as normal, but instead of using the CHECKING account, you would use the LIABILITY account:

01-2341-000 Water Credit Balance CREDIT 1000
01-5533-000 Water Utility DEBIT 1000

In this way you still show the expense in the system, but that Water BIll Credit is reduced. You will need to follow the balance until you get to the point where its all used up. Then you would enter something like this, with a bill of 1000, but a credit balance remaining of 900:

01-2341-000 Water Credit Balance CREDIT 900
01-1110-000 Checking CREDIT 100
01-5533-000 Water Utility DEBIT 1000


Hope this helps
Neil Zampella

Using PC+ since 1999.

GSA Candace
Posts: 8
Joined: Sun Dec 27, 2020 2:02 pm

Re: Credit on an account payable

Post by GSA Candace »

Thank you Neil, that was exactly what I was looking for.

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