USA Vendor payments made from escrow account

[csonsini]

One of my clients sold their liquor license and all their outstanding vendor bills were paid directly from the escrow company. The open invoices
are still in A/P. What is the correct way to record those payments and get them out of A/P when the money didn't come from the business checking account?

 

[kirby]

Record the escrow transactions in your books. On the escrow statement you will see debits when escrow paid vendors directly. Record those debits to remove your A/P payables. That is Dr A/P when recording the escrow transactions.