A.4.5 Recording a Vendor Prepayment

Scenario: This exercise has three parts, with the scenario for each shown as you go through the exercise. Be sure to do all three parts of this exercise in the same Sample company session.

32 steps

QuickBooks

Akadian

Start in the Sample company.

To complete this exercise, you must be in the Sample company. From your QBOA account, click on the Gear icon on the top right corner of the screen, then select Sample company.

Note that you will be logged out of your current account. If you are sure, click "Continue" to confirm.

Now let's get started with the exercise.

Scenario, Part 1

Scenario: Craig just landed a contract to build a football field for the new high school. Because it is so large, he has hired Excavation Excellence to prepare the field before his landscapers can get to work. The estimate from Excavation Excellence is $120,000, and they require a 30% deposit to secure the contract. Craig is hoping to land other large contracts like this and hire them in the future. You will need to set up Craig with a vendor prepayment account and pay the Excavating Excellence downpayment so they can get started.

First, create the vendor prepayment asset account.

Click "Accountant Tools", then select "Chart of accounts".

Click "New".

Click "Assets".

In the Save account under field, select "Other Current Assets".

In the Tax form section, select "Other Current Assets".

In the Account name field, type "Vendor Prepayment".

Click "Save".

Next, create an Expense for the 30% deposit.

Click the "+New" button, then select "Expense".

Since Excavation Excellence is a new vendor, we will need to set them up, which can be done directly within the Expense transaction.

In the Payee field, type "Excavation Excellence", then select "+ Add new Excavation Excellence".

Click "Save".

On the first line, in the Category field, select "Vendor Prepayment".

In the Description field, type "High School Excavation".

In the Amount field, type "$36,000". *This is 30% of $120,000.*

Click "Save and close".

Scenario, Part 2

Scenario: You have just received the first bill from Excavation Excellence in the amount of $14,000. How do you record this bill as paid, given that you have already put down a deposit?

First, enter the Bill.

Click the "+ New" button, then select "Bill".

In the Vendor field, select "Excavation Excellence".

On the first line, in the Category field, select "Job Expenses".

In the Description field, type "High School Excavation, Part 1".

In the Amount field, type "14000".

On the second line, in the Category field, select "Vendor Prepayment".

In the Description field, type "Apply Deposit".

In the Amount field, type "-14000".

Click the down arrow next to Save and schedule payment, then select "Save and close".

Scenario, Part 3

Scenario: Craig is checking his cash flow to see if he can begin some other projects. He needs to know how much is left of his prepayment to Excavation Excellence. How could you find this out for him?

Create a Balance Sheet report.

From the left navigation bar, click "Reports".

Click "Balance Sheet".

In the Report period field, select "All Dates".

Click "Run report".

Because Excavation Excellence is the only vendor Craig is currently prepaying, you can reference the total right from the Balance Sheet. Eventually, however, this same account will be used for other vendors. Use the following steps to see the details of this account organized by vendor.

On the Vendor Prepayment account line, click the total "22,000.00".

Intuit is currently changing the format of all reports. **If you are presented to view the report in Modern View**, follow steps 30-32, as written below. **If you are presented to view the report in Classic View**, use the steps written out below: - Click "Customize" - In the Group by field, select "Vendor" - Click "Run Report". The resulting report will group it by Vendor (pictured below)

Click "Group".

In the Group field, select "Vendor".

The report will automatically update on the left side. To view the report on your entire screen, click the "X" on the upper right corner.

The resulting report is now grouped by Vendor.

🎥 Video

Want to follow along? [Click here](https://youtu.be/HU7bINbKQ5M) for our video walk-through.

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