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Collecting payment mistakenly recorded earlier

Receiving payment but we recorded the amount as a sales discount on last quarter's payment

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We have special payment terms with a client who pays each invoice in 2 installments: 98% on 1st payment, the remaining 2% on 2nd payment in the following quarter.  On several invoices, we mistakenly recorded the 2% as a sales discount with the first payment, and now, in the next accounting quarter, we received their payments for the 2%, but of course those invoices are closed. 

I cannot simply make GJ entries, as only the owner of our company has access to GJ; I thought about creating a new invoice for the item "bad debt recovery" which we already have setup in our system (QuickBooks Enterprise); and apply the payment to this invoice. Is that acceptable?

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By cparochny
Sep 1st 2017 13:59 EDT

Explain to the owner that allowing the customer to establish the terms of payment that they may move to even more advantageous terms. The owner should address payment terms with the customer.

Don't issue a sales discount unless you are ready to actually write off 2% per month. Let it roll over and be subject to being charged interest. Subsequent payments can be applied as directed by the customer or, if not designated, to the interest and the balance to the oldest open invoice.

For past errors why not create a new account and call it what it is "Prior Discounts Recovered" and not assign it to any customer.

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By Michael Abrams
Sep 1st 2017 16:31 EDT

This is a fairly simple matter, really...

Simply create an invoice in QB to the customer (you won't need to send it out) and credit the Sales Discounts account.

This will put the 2% amounts back on the customer's account (where it belongs) and "erase" (YTD) the previous discounts "taken" in error.

I wouldn't use a "bad debt recovery" account, because that is not what this is. This is simply a correction for prior period errors, which should offset the original account affected.

This will put the books back in proper order, but it may take an explanation to the owner as to the reason the Sales Discounts account is going the wrong way in the current period...

If the amount is significant, a decision might be made to restate prior closed periods...

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