How to apply a credit in AP with a journal entry

 When a user voids a check, the invoice will be reinstated into your payables and will be available for selection in AP payments to pay again.  If you need to take a credit against that invoice, however, you cannot use the "apply to" change option in AP inquiry because the invoice has already been paid and part of it has been cleared to history.  You will receive an error.

In this instance, you can apply a credit to the reinstated invoice balance via a journal entry.

Let's walk through an example--

Here I have an invoice in my history view of Ap inquiry that was paid with a check, and then voided.  Invoice 6456.  It is displaying in my history view of AP inquiry for the original invoice entry and the check payment for that original invoice.

I later voided that check, which puts the balance back into my current AP view.

For this example, I want to use the credit from invoice 8794 to pay invoice 6456.  If I try to click on the line for 8794, I receive the error when attempting to apply it, because part of invoice 6456 has already been put into history and cleared.  

Instead, I will need to do a journal entry to apply that balance to the reinstated invoice. I will open a new journal, and then select my AP GL account.  I want to take the balance of $100.00 away from invoice 6456.  Because AP is a liability and has a normal credit balance, this means I need to input a POSITIVE amount in my journal entry.

If I want to remove $100 from my AP account, I will enter a +100 as the amount.  this may seem contradictory since AP inquiry shows a positive $100 for that invoice, but it is important to remember that liability accounts carry that credit as their normal balance and are therefore inversed.  See below- this line in the journal will net that invoice balance to zero.

Then, I must enter a line to use some of the credit invoice I am applying.  Even though the credit shows as a negative in AP inquiry, to use that credit I will apply a negative amount in journal entry.

Once this is posted, I see that invoice 6456 now nets to zero with the credit from 8794 applied to it, and then a remaining balance of $50 on the credit invoice for 8794.

I can then clear the zero balance off my current view into history by choosing File > roll current to history from the File menu of AP inquiry.

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