Account posting question

[DTS]

T/p's company and another company owed each other money. When the other company paid t/p's invoice, they simply took off the amount that the t/p owed them from their payment. Example: t/p's invoice sent to other company is $80K, my t/p owes this company $8K. My t/p gets a check for $72K. I've yet to get a satisfactory answer to what the $8K represents. Somehow this is tied to inventory and samples of wine the other company distributes for my t/p to other companies.

How can I properly post this?

Thank you. I'm sorry if this sounds so convoluted. It is to me.

D

[Edsel]

Who is your client

Dennis, are both of these your client? Just one of them?

Doesn't matter, since the $8K will need to be known anyway. I'm just thinking how you can approach one party or the other. For example, one company has $80K in taxable revenue, and "since we don't have specifics on the $8K, we can't deduct it." That generally will get a response...

[dsi]

Your entires should be:

DR Cash $72,000
DR A/P 8,000
CR A/R 80,000

[DTS]

Edsel

Dennis, are both of these your client? Just one of them?...

No, the "other" is not my client, just t/p. I am always thinking that there is a miscommunication on accounting terms I use with my client. He thinks it's one thing and I'm trying to find out something else. Very frustrating!

David,

Your entires should be:

DR Cash $72,000
DR A/P 8,000
CR A/R 80,000

Thank you, David. This is what I told him last night, initially, but wanted to confirm with you all. I may have to redo the entries depending on a mutual understanding of what all this represents.

Thank you both.

D

[Black Bart]

Posting

Depending on who's doing the posting, the $8K could be a debit to expense (advertising?) or inventory (wine samples?) rather that a debit to accounts payable. That's because some people don't want to go to the trouble of setting up an accounts payable account for every invoice they get; preferring instead to simply debit the asset or expense directly from the check when they pay the bill.

[DTS]

Bart

I am trying to nail the client down so I can get an accurate read on what the heck this stuff is and exactly how this is done. I think there is an simple way to handle this once I find out.

Of course, here I sit waiting for info so I can help the client (it was so urgent last night at 10!). No one's called, no one's written!