now we will learn how to record prepayments from customers
these advanced payments from customers are also referred to as customer deposits there are two
methods of recording prepayments from customers in this video we will learn about the first one
the first method uses the receive payments window now what will happen when you use the
receive payments window to record an advance payment from a customer well the open invoice
report will show a negative number for that customer's prepayment the customer balance
detail will also show a decrease in the customers balance for that same particular advanced payment
the bad news is there is no indication of the customers prepaid in the trial balance
of course the accounts receivable account will decrease but there is no separate
account in the general ledger to show the total advance payments from all customers
for example on february twenty fifth allen paid us two thousand dollars in advance for twenty video
hours to be done on february twenty sixth which is a future date and of course he paid us with
check number sixty one sixty one for this we will use the receive payments window when we use the
receive payments window we record this transaction like we would record any other unapplied credit
it will show as a negative number on the open invoice report until it is applied to a future
invoice this is what alan's open invoice section looks like before we record the advanced payment
we open the payment window and put in the information we choose alan of course i usually
suggest you collapse the ribbon if you're not using anything in the ribbon he paid us with
check number six one six one the day he paid us in this example is february 25 and of course the
money amount that he paid was two thousand dollars when i push the tab key the computer thinks
that i am paying for invoice number 13 but i am not therefore we must remove the check mark
from invoice number 13 and don't place the check mark anywhere that's because this payment from
check number six one six one is not for invoice number thirteen it will be for a future invoice
by the way don't forget to change the deposit to to undeposited funds because this is not money
that will go directly into the bank this is a check alan gave us that we are waiting to deposit
so again quickbooks will place the check mark here on number thirteen because it assumes that's the
one he's paying for remove it and make sure there's no check marks at all when you click
save and close you will get this warning message you have a payment credit you could print the
credit memo if you want and send it to alan or you could just click ok and make sure that you have
that credit but it's still not yet applied when we click ok we look at the open invoice report
and we see the payment is now showing on the open invoice report this is the first time that
a payment showed up on the open invoice report and as you can see it's a negative number and
it makes the balance go down and it will stay here until we apply that payment to the future invoice
now let's imagine on february 26
holden did the 20 video hours for alan that allen paid for the day before february 25th
first record the invoice make sure you put this as invoice number 21. secondly click apply
credits from the ribbon then choose the payment to apply just like you are applying any other credit
so we open the invoice window of course i like to make it small enough to fit the screen
put the date february 26th make sure that you change this to invoice number 21
because recording credit memos changes the pattern of the invoice number so you have to put invoice
number 21 yourself choose alan and of course the quantity is 20. the item is video and you can see
the total is six thousand dollars now we made the invoice but now we have to apply the credit when
you click apply credit quickbooks will prompt you to save the invoice before you apply the credit
so click yes the apply credits window opens up just like it did in the previous video notice the
only credit that's available in this case is from check number six one six one if there were several
you would have to choose the credit and then click done but in this case the credit is already
chosen for us because it's the only one when we click done we notice the balance of the invoice
automatically goes down to four thousand dollars when we click save and close we look back at the
open invoice and we see that the credit from the prepayment of two thousand from check number six
one six one is now gone it's no longer in the open invoice and you also notice that this invoice
number twenty one which the original amount was six thousand now shows up as four thousand dollars
if we double click on invoice number twenty one and then we go to reports and check the history
of this you can see that it was created on february 26th but then you applied a payment
that you had received on february 25th and that explains why the balance is four thousand dollars