I have the following scenario and wonder what the correct approach would be.
Invoice A is overpaid by $88. Therefore, balance due is -$88.
The customer wants to buy a new item for $74. Invoice B is thus created and has balance due of $74.
I should mention Invoice A is several months old, and the customer recently decided to apply his credit to a new purchase, so changing the original invoice isn’t optimal.
To go about this transaction, I went into Invoice B, clicked Receive Money / New Cash Transaction. I did not select a cash account, thus it auto selected Suspense.
Under items, I have:
Accounts Receivable, Invoice B, $74.
Accounts Receivable, Invoice A, -$74.
The outcome is that Invoice B is paid, and Invoice A has a remaining balance of -$14, which can be fixed by issuing a refund for the remaining balance.
However, when I look in my cash transactions tab, I see Invoice B has a transaction against the red colored suspense account for a balance of 0, as expected. However, I realize the Suspense account should never be used (even though this particular transaction doesn’t generate a balance for suspense and doesn’t show up on the summary).
In any case, is there a better way to manage credit between invoices without involving any type of balance accounts (cash or bank) since technically no balance is transferred?