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Advances paid to supplier for open purchase orders

Posted by abdullahkalouti 
Advances paid to supplier for open purchase orders
May 04, 2013 05:40AM
Hi,

I am in the retail business, almost all suppliers require that you pay an advance to them after submitting your purchase order.

My question is, how can i record the advance paid to the supplier after creating the purchase order keeping in mind that I still havent recieved the inventory?

Also, are purchase orders in quickbooks only limited to inventory or can it be used for transactions that do not require invnetory, for example a purchase order for an exhibition that we are planning to attend. And how do i record the advance for that too.

Thank you.
Re: Advances paid to supplier for open purchase orders
May 09, 2013 01:50AM
Hello Abdul

Check out this video we made for you on Accounting for Advanced Payments

This should help.
Re: Advances paid to supplier for open purchase orders
October 25, 2013 07:04AM
Generally Accepted Accounting Principals would record an advance payment as a Prepaid Expense Asset and not a negative to a Receivables Asset.
On a different topic, you created a long term loan for a building and input a $450,000 principal, but the user does not see the debit, just an input of the loan amount. I assume that the company preferences default cash account gets the debit part of that entry?

Mike
Re: Advances paid to supplier for open purchase orders
November 04, 2013 05:18PM
Hello Mike,

You are correct, the debit would go to the bank account the funds were deposited to. You can make the deposit using the "Building Loan Receivable" as an Other Assset Account. QuickBooks will prompt you to set up the account if you haven't already done so. Both the credit and debit entries are automatically entered when you save the deposit.
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