Barter Accounting

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Barter Accounting is used when exchanges of services or products are done between 2 parties with either no or partial money involved in the transactions


Barter Accounting in QuickBooks

We received a question in our Forum section from Mary.

"I have vendors that I bill as customers for warranty work. They pay us in credits but I need their credit to pay thier customer side invoice and still be able to use it as a credit to the vendor side bill. How can I do that without doing a general journal entry? "

Watch our written and video response below:

1. Set up a bank account called "Barter Account".

2. You can then apply credits at the bottom of the payments window to the Barter account. 

3. T hen pay bills for that customer/vendor using the Barter Account in the "Account" field at the bottom of the Pay Bills window.

I would also like to add is instructions on if they were making an invoice and receiving payment, in the payment screen click  Discounts & Credits and apply the credit to the Barter account for either all or part of the payment.

The remaining balance will then show the next time you receive a payment from that client, or be deposited to the bank account, or undeposited funds if they don’t choose to have payments go automatically to the bank account.  More often than not the amount of the credit for services will not be 100% of the bill.

The same thing with paying the bill to the vendor, you can choose to pay the entire bill using the Barter account as you did, or part of the bill to the Barter account, then either go back to pay bills and pay the remaining with your checking account or leave the balance alone until you have more credits.

You can also run a report on the Barter Account and filter it by name to the client’s name to see the balance they have in the event you have more than one barter customer/vendor.  You can then memorize the report with the client/vendor’s name in the title so you can check their balance and activity.

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