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December 28, 2025
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Free
tip for cleaning up your year end sub-ledger
accounts
How to use a clearing account:
When
you have a vendor and a customer subledger account you
want to offset in whole or in part, the best way to
accomplish this using QuickBooks software is to effect a
swap of funds between AR and AP is via a clearing
account. I usually set up a clearing account as an Other
Current Asset type of account, use an Item that links to
both the vendor and the customer's transactions and
ensure that it's always kept reconciled to a nil
balance.
The easiest way to make the swap is
to use the forms, a Bill or Bill Credit to clear the
vendor's AP account and depending on whether it's an
increase or decrease to the customer's AR account, I
would use an Invoice or a Credit Memo, clearing the
agreed amount with out tax consequences of course, using
an Item (use Other Charge Item Type and set up both
sides of the Item to point to the same Clearing Account
you've just established.
Here's the
sequence:
Set up an Other Current Asset called
Clearing Account
Set up an Other Charge Item called
Clearing Account and open up the purchases side of the
Item to link both sides of this Item to the Clearing
Account
Open a Bill and choose to make it a Bill
Credit or leave it as a Bill, making an entry to the
Vendor (v) for the agreed amount, using the Item tab to
link the Item to the Account. It's a good idea to
document any agreements in writing, print out the email,
or get a signature of who agreed to this transfer as
it's like a payment.
Open an Invoice or a Credit
Memo and enter the same amount using the same Item to
link the Customer (c)
Check the register for the
Clearing Account, and in fact, use the bank reconciler
feature to reconcile the account each time you make such
a transfer to ensure that the Clearing Account is always
nil.
Make 2012 the year you learn how to use
QuickBooks effectively and efficiently.
If
you want to learn best practices on how to master your
use of QuickBooks software, I've recorded 20 hours of
training, in 2 hour videos for use by bookkeepers,
accountants and business owners and their spouses...
Click here to buy individual videos, or save
by purchasing the entire set of 10 videos!
/catalog/item/6427752/8718263.htm
If
you are a member of IPBC, save $200 on the 10 videos by
logging in as a member and checking out my forum posting
just before Christmas.
To learn how to master
the software on your own would probably take at least
100 hours. That's what it took me, just to get familiar
with it, and then thousands of hours of experimenting
with the best way to get it done.
So you
aren't just saving money, you're saving valuable time!
Disclaimer:
Eileen Reppenhagen CGA does
not research or endorse any
product or service appearing in ads
posted on this site.
Please
do NOT rely on or use the
information on this website as a
basis for a course of action without
obtaining appropriate professional
advice
.
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