How do you account for a cash payment by a customer in which some is used for payment to a vendor?

Question

I am using Quickbooks Pro 2011. I received a $750 cash payment from a customer, then used $150 of it to pay a vendor's invoice, creating a bank deposit of $600.

I can't figure out how to credit the customer, show the payment to the vendor and end up with a single check register deposit of $600.

I tried to do a split deposit such that there are two lines: one for $750 with the customer in the "Received From" field and the From Account being "Undeposited Funds". The other is for a negative $150 with the vendor in the "Received From" field and the From Account being "Repairs and Maintenance".

On the customer's account, they are properly credited for $750. And in the check register, I have the correct $600 deposit. But on the vendor's account, the $150 payment doesn't show up.

So I'm either missing one little thing or I need to do it a totally different way.

Answer 1

Sounds like you need a cash account. Suggest you do as follows:

1. Add an account to represent cash on hand – let's call it "Cash".
2. Record a deposit of the full $750 to "Cash".
3. Record the payment of the vendor's invoice from "Cash".
4. Record the deposit/transfer from "Cash" to your checking account.

This better models what actually happened in real life, rather than trying to adapt things into a system that lacks a cash account.