Applying Excess Credits for One Job to Another Job in QuickBooks

How to Swap Credits from One QuickBooks Job to Another

A reader wrote to ask our help. He has a customer with three jobs, all of which are completed. Two of the jobs have balances due, but the third job has a substantial outstanding credit for items that were returned after the job was finished. He wants to use the credit on the third job to pay off all of the first job and part of the second job. He wants to have a logical "trail" in QuickBooks to explain to the customer and to his accountant.

We found a way to accomplish this without changing the history of the original transactions that were applied to the three jobs in QuickBooks.

For this example, we used our customer named ContractorLarry, who had three jobs: Job01, Job02, Job03. Before the credit was issued, the following QuickBooks invoices and payments had been posted:

















We then issued a credit to Job03 in the amount of $513.60. This created a credit balance for Job03 of $228.80. That credit amount is sufficient to pay off Job01 in full, and apply the remaining credit balance to the open balance for Job02.

We needed a place to "trade out" the credit from one job to another, so we created a QuickBooks account of the type Other Current Liability, which we named Customer Credits Exchange.

The first step was to move the credit amount into the Customer Credits Exchange account (so that we could use it for the other jobs), without removing the credit's history from Job03. We accomplished that with a QuickBooks journal entry that debited $228.80 to Accounts Receivable and credited the same amount to the Customer Credits Exchange account. Entering the job in the Name column created a receivable (invoice) against which we could wash the outstanding credit.

Create a QuickBooks Journal Entry to Swap Credits










We opened the QuickBooks Receive Payments window and selected Job03, to display the ersatz invoice created by the debit side of the journal entry.

Use the Credit to Pay off the Invoice Balance













We left the Amount field at 0.00 and clicked the Discounts & Credits button to apply the existing credit to the new charge.

At this point, Job03 is at a zero balance, the job history has all the QuickBooks transactions that were applied, and the Customer Credits Exchange account has a credit balance of $228.80; we've moved the job credit to the balance sheet.

Next, we have to use $205.00 of the credit balance in the Customer Credits Exchange account to pay off Job01. In the QuickBooks Receive Payments transaction window, we selected Job01 to display the current balance due.

Receive a Payment for a Different Job for the Same Customer














Leaving the Amount field at 0.00, we clicked Discounts & Credits and created a discount (not a credit) against the invoice in the amount of $205.00. We used the Customer Credits Exchange account as the Discount Account.

Apply a Discount to the Current QuickBooks Job













Job01 now had a zero balance and $23.80 remained in the Customer Credits Exchange account, which we applied against the balance for Job02 as a discount (same steps as applying the discount to Job01).

The Customer Credits Exchange account has been emptied, and the credit for Job03 has been applied to the other jobs in QuickBooks.

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