Make Down Payment to Vendors but Show the Down Payment Made as Deduction in Purchase Order

 

Solution/Workaround/Gotcha/Recommendation Details:

A. Create an Other Charge for Purchase for the down payment (sample name: Vendor Down Payment)

 1. Navigate to Lists > Accounting > Items > New.

 2. Choose Other Charge - for Purchase.

 3. Enter name for Down Payment item.

 4. Under the Basic Tab > Expense Account > choose your vendor down payment account (this will serve as temporary account).

 5. Make sure the Can be fulfilled/received box is checked.

 6. Save.

 

B. In the Purchase Order:

 1. Navigate to Transactions > Purchases/Vendors > Enter Purchase Orders.

 2. Under Items tab > Items Sub tab > Choose the Down Payment item from the list.

 3. Enter in Rate column the down payment amount paid with a negative sign (to act as deduction to the PO).

 4. Enter all other necessary data in the PO.

 5. Save.

  *** PO Subtotal will be net of Down Payment (ex. $1,500)

 

C. Down Payment to Vendors can be made either by Writing a Check or Using a Credit Card:

I. Write Checks for paying Down Payment to Vendor:

   1.  Navigate to Transactions > Bank > Write Checks. 

   2.  In the Payee field, select the vendor. 

   3.  On the Expenses sub tab, in the Account column, select the Down Payment Account (Temporary account).

         Note: User must enable the Expand Account Lists preference to include the prepayment (Other Current Asset) account in the list along    with Expense accounts. For more information on this preference, read Setting Accounting Preferences.
   4.  In the Amount column, enter the prepayment amount. 

   5.  Optionally include notes in the Memo column on what this prepayment is for. 

   6.  Click Add. 

   7.  Click Save.  
  ***GL Impact:  Dr. Down Payment Account         (whole amount - ex. $500)                     

                                       Cr. Cash                                          (whole amount - ex. $500)

 

II. User Credit Card for paying Down Payment to Vendor:

   1. Navigage to Transactions > Bank > User Credit Card.

   2.  In the Vendor field, select the vendor. 

   3.  On the Expenses & Items tab > Expenses sub tab, in the Account column, select the Down Payment Account (Temporary account).

         Note: User must enable the Expand Account Lists preference to include the prepayment (Other Current Asset) account in the list along with Expense accounts. For more information on this preference, read Setting Accounting Preferences.
   4.  In the Amount column, enter the prepayment amount. 

   5.  Optionally include notes in the Memo column on what this prepayment is for. 

   6.  Click Add. 

   7.  Click Save.  
  ***GL Impact:  Dr. Down Payment Account         (whole amount - ex. $500)                     

                                       Cr. Credit Card Account                   (whole amount - ex. $500)

 

D. Receive the items from the PO including the Down Payment Item.

  ***GL Impact: Dr. Inventory                                (whole amount - ex. $2,000)                     

                                       Cr. Inventory Received Not Billed             (whole amount - ex. $2,000)

 

E. Bill the PO made.

   ***GL Impact: Dr. Inventory Received Not Billed  (whole amount -ex. $2,000)

                                       Cr. Accounts Payable                      (Net of Down Payment - $ 1,500)

                                             Down Payment Account            (Down Payment - $ 500)

 

F. Pay the bill for this PO.  Note that Amount of Bill to be paid is net of down payment ($1,500)

    ***GL Impact: Dr. Accounts Payable                   (net of DP - $ 1,500)

                                       Cr. Cash                                           (Net of DP - $1, 500)