How to set up bartering or in-kind services (customers and vendors trading goods or services)

1. Create a new G/L account. Select GL, Accounts, Maintain Chart of Accounts
2. Click New. For example, account number 1299.00 "Clearing Account" with 'Account class' selected as Posting.
3. In A/R, define a new Sales Account for account #1299.00; use description "Clearing Account". Select AR, Utilities, Sales Accounts, Maintain. Use the binoculars to select the next undefined sales account, and define it.
4. Post an A/R credit memo by selecting AR, Transactions, Credit Memo. Apply it to the original invoice; use the Distribution button to distribute the amount to the sales account defined in step 2.
5. Post an A/P credit memo for the same amount as the A/R credit memo. Select AP, Invoices, Credit Memo and apply it to the original invoice; distribute to the new clearing G/L account number.

Example entry:

IMPORTANT: If it is important to update the vendor 1099 field, set up the 1299.00 Contra Clearing Account as a Cash Account in Cash Management (CM). Create a credit memo as stated above in Accounts Receivable. Rather than create a credit memo in Accounts Payable, use 'Enter Handchecks' to close the invoice, make sure the cash account selected for the check is 1299.00, the Contra Clearing Account. By using a handcheck instead of a credit memo, the transaction updates the vendor 1099 field correctly.

How to set up a cash account or checking account