Offset AP & AR

You've got me here and I'll share a workaround to help you offset the transactions, sc38.

Before doing so, please make sure to consult your accounting professional for advice. To begin, let's create a wash or clearing account. This is a temporary account to move money when the transfer cannot be done directly from one account to another.

Here's how:

1. Go to Accounting > Chart of Accounts.
2. Select New and choose Cash and cash equivalents from the Account Type drop-down menu then Cash on hand from the Detail Type.
3. Add the name of the account as ‘Wash or Clearing Account’ (this account will be zero out after the process).
4. Click Save and Close.

Next, create a journal entry to transfer A/R to the Wash account:

1. On the left panel, click + New > Journal entry.
2. Set the Journal date.
3. Select the Wash or Clearing Account on the first line and add the amount in the Debit column.
4. On the second line, choose the A/R or Trade and other receivables account and put the amount in the Credit field. Make sure to add the customer name from the Name column. 
5. Click Save and close. 

Next, record a journal entry to transfer the amount from Wash account to A/P or Trade and other payables account:

1. On the left panel, click + New > Journal entry.
2. Set the Journal date.
3. In the first line, select the A/P or Trade and other payables account and add the amount in the Debit column. Make sure to select the supplier name from the Name field.
4. Select the Wash or Clearing Account and put the amount in the Credit field. 
5. Click Save and close. 

Once done, follow these steps to the apply the journal entry: 

1. On the left panel, click Expenses > Supplier.
2. Select the supplier's name and find the bill.
3. Click the Make payment link and put a check mark on the journal entry box under Credits.
4. Hit Save and close.

Finally, close out the receivable transaction:

1. Go to Sales > Customers.
2. Click the customer's name and select the Receive payment link of the invoice you want to close.
3. In the Receive Payment window under Credits, put a check mark on the journal entry box. Make sure there is no amount on the
4. Amount received field if you are just applying the credit.
5. Hit Save and close. 

To learn more about journal entry, you can read this article: Create a journal entry in QuickBooks Online.

Please reach out to me if you need further assistance. I'm just a post away to help you out some more. Have a great day!