How to contra a receivable with the payable?

Software: MoneyWorks Desktop accounting software

You record the Back Charge into the MoneyWorks via Purchase Invoice when received the bill from the Client (your main-contractor). Back Charge is a project related expenses such as damages, work which has done on your behalf, etc. The purchase invoice which you recorded debits the Back Charge and credit the Accounts Payable account.

MoneyWorks does not allow you to contra the purchase invoice (accounts payable) directly with the outstanding sales invoice (accounts receivable), a ‘Clearing Account’ (a bank account type) is used to offset the two.

Clearing account

Then, use the payment feature in MoneyWorks to pay the purchase invoice with the clearing account and a receipt to receive the contra amount of the outstanding sales invoice into the clearing account. The payment debits the Accounts Payable and credits Clearing Account, whereas the receipt debits the Clearing Account and credits the Accounts Receivable. The Clearing Account should not have any balances as a result of contra between receivable and payable.

 

Comments are closed.