How do I offset sales and purchase documents (Invoices, DN, CN) from the same/different parties? Using Contra Account

Use this Method to contra between multiple Sales Invoices/Purchase Invoice/Debit Note/CN Note.

A/ Contra Sales Invoice of customer A to Purchase Invoice from Vendor B:

Consider this Scenario: We need to contra off amount from Sales Invoices from customer A and Vendor B

• Customer A: Sales Invoice 1: $3000due        
• Vendor B: Purchase Invoice 3: $2000 due

Contra Account provide a more flexible way to contra between several documents (Sales Invoice, Purchase Invoice, Debit Note, Credit Note, etc.). However, Initial Set-up will be required.

1/ In the Chart of Account (COA), create an account called Contra Account as a Cash or Bank Master Type

2/ Set up a Payment method (In Miscellaneous -> Payment Method) called Contra.

3/ Create a Customer Receipt using Contra as Payment method to Customer A:

Contra                               Dr  2000

Account Receivables                    Cr   2000

4/ Create a Vendor Payment using Contra as Payment method to Vendor B

Account Payable        Dr  2000

Contra                                  Cr   2000

5/ By doing this:

• Contra account amount will be 0. NOTE: Please be cautious when you use this method. The Contra Account MUST BE zero after the contra has been done.

• Sales Invoice from Customer A due amount is 1000

• Purchase Invoice from Vendor B due amount is knocked-off by 2000, amount due is now 0.

B/ Contra Sales Invoice of customer A to Credit Note of customer B:

If you wish to apply CN from other customer to other customer (Parent and child companies.)

Use Contra payment method to receive from A and Pay to B.

C/ Contra Purchase Invoice of customer A to Debit Note from vendor B:

Use Contra payment method to receive from B and Pay to A.

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