QuickBooks | The walking ATM

Software: Intuit QuickBooks accounting software

You may give your purchaser a sum of money to go overseas to source for new products, make payment and arrange shipment back to your country. Your purchaser is like a “walking” ATM (Automated Teller Machine), help making payment as and when required.

You may create this “Purchaser” as a Bank account type with the currency type set up accordingly. That is, if you are paying him/her in CNY (Chinese Yuan Renminbi), then the currency type will be in CNY.

You can use General Journal, Transfer Funds or Write Cheque method to transfer the fund to him/her. If Write Cheque method were to be used, then you need to create a name (either Vendor type or Other Name type) with the currency type set up to be same as the currency transacted (that is, CNY if payment to him/her is in CNY).

The double entry for this transaction will be:

Debit the Purchaser’s account (Bank account type)

Credit Bank account (The bank account which you transferred the money from)

When payment made by the purchaser, you may use the Write Cheque transaction to issue out payment from the Purchaser’s account to the “Vendor” with the corresponding account settings, such as Cost of Goods Sold account or relevant Expenses account) under the Expenses tab.

The double entry for this transaction will be:

Debit Expenses (or Cost of Goods Sold) account

Credit Purchaser’s account (Bank account type).

You can use the Cheque Register to view the transactions and the balances of this account (From the Banking menu select Use Register).

The advantages of using a “Bank” account type for tracking of the advances paid to the purchaser is that you can use the “Reconciliation” function in QuickBooks to tally up the account.

Any positive amount left in this Purchaser account, which can be viewed from either the Register or the Balance Sheet report, will be the amount due by the purchaser to the company.

If the Purchaser returns the money to the company, you may use a General Journal, Write Cheque or Transfer Fund’s method to transfer the money back from the Purchaser’s account to the bank account.

The double entry for this transaction will be:

Debit Bank account (or Cash in Hand account)

Credit Purchaser account.