Post Open Item Balances

How to clear open item balances in account payable?

Sagar Nayak

• Nov 1st, 2016

We can clear Open Item balance in 3 ways : 1st method - fully Clearing, 2nd method - Partial Clearing, 3rd Method - Residual Clearing.
According to 1st Method : Fully Clearing
At the time of Purchase : Purchase a/c Dr 50000
To Accounts Payable Cr 50000
Fully Clearing Method : Accounts Payable A/c Dr 50000
To Cash/bank A/c Cr 50000
Open Item Balance = Rs. 0.00
According to 2nd Method : Partial Clearing
At the time of Purchase : Purchase a/c Dr 50000
To Accounts Payable Cr 50000
Partial Clearing Method : Accounts Payable A/c Dr 25000 (1st Clearing)
To Cash/Bank A/c Cr 25000
Open Item Balance = Rs. 25000.00 Cr
Accounts Payable A/c Dr 25000 (Final Clearing)
To Cash/Bank A/c Cr 25000
Open Item Balance = Rs. 0.00
According to 3rd Method : Residual Clearing
At the time of Purchase : Purchase a/c Dr 50000
To Accounts Payable Cr 50000
Residual Clearing Method : Accounts Payable A/c Dr 23000
To Bank/Cash A/c Cr 23000
In Residual method the system clear fully amount and generate a new line item.
Open Item Balance shows like this: Accounts Payable A/c Dr 50000 (1st Clearing)
Bank/Cash A/c Cr 23000
Accounts Payable A/c Cr 27000
Open Item Balance = Rs. 27000.00 Cr
Accounts Payable A/c Dr 27000 (2nd Clearing)
Bank/Cash A/c Cr 13000
Accounts Payable A/c Cr 14000
Open Item Balance = Rs. 14000.00 Cr
Accounts Payable A/c Dr 14000 (Final Clearing)
Bank/Cash A/c Cr 14000
Open Item Balance = Rs. 0.00