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Set up a Clearing Account in QuickBooks Desktop

A Clearing Account is an account that you use to move money from one account to another account when you cannot move the money directly. This account normally has a balance of $0.00 because you always take out the same amount that you put in. It may also be called a Barter or Wash Account.

Uses for clearing accounts

You need clearing accounts in QuickBooks Desktop because the program will not let you record transactions that contain:

  • Two A/R accounts.
  • Two A/P accounts.
  • One A/R account and one A/P account.

The following are the common uses for a clearing account. If you have multiple uses for the account, you may want to create one for each.

Add and use clearing accounts

To set up a clearing account:

  1. From the Lists menu, click Chart of Accounts.
  2. Right click anywhere in the Chart of Accounts then select New.
  3. In the Add New Account window, click the Bank radio button. Note that while you can choose from several types of accounts, the best is a bank account because of the following reasons:
    • You can pay into a bank account via Receive Payments or Make Deposits.
    • You can pay out of a bank account via Write Checks or Pay Bills.
    • A bank account appears on the balance sheet and on the statement of cash flows to balances and changes in balances.
    • To allocate expenses to overhead or class using a zero check, you must use a bank account as your Clearing account.
  5. Click Continue.
  6. In the Account Name field, enter Clearing Account, Barter Account or Wash Account.
  7. Do NOT enter an opening balance.
  8. Click Save & Close.

When using  a clearing account, you will typically follow this process:

  1. Create a journal entry
  2. Add the A/R or A/P from which you are moving money. 
  3. Add the Clearing account. 
  4. Save the Journal Entry.
  5. Create a second Journal Entry.
  6. Add the Clearing Account.
  7. Add the A/R or A/P account to which you moving money. 
  8. In either Pay Bills or Receive Payments, link the Journal Entries together.
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4/26/2017 4:52:12 AM
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