Diagnosing problems during a QuickBooks file is straightforward once you recognize what you’re trying to find. it’s always a matter of glancing at the chart of accounts for love or money out of the standard. The matter is that the majority of business owners aren’t sure what’s out of the standard and what isn’t. This is often the primary during a series of articles which will explain the way to diagnose what the matter is and the way to correct the matter once known.
Negative Balances in A/P or A/R
Although this might seem quite basic for those that are entering data into QB for a short time, for those that haven’t this might be new information, so persevere there for his or her sake. Accounts Payable is an account automatically created by QuickBooks once you enter your first bill. This is often the account that each one these amounts enter and from which these same amounts are taken once you pay the bill. More often than not, the clients I see for the primary time have a negative balance within the A/P and can’t explain why, nor do they know what to try to do with it.
A negative balance within the A/P would indicate that you simply owe your vendor money, and though there are legitimate reasons why you’d provide a credit to a vendor, a refund for extra material sent, etc., most of the time it’s the result of an easy mistake. That mistake is the entering of a payment to a vendor without entering the bill that the payment should apply to. This happens when the info entry clerk isn’t using the Enter Bills/Pay Bills screens and is just entering the amounts paid into the register. Since there’s no corresponding bill, (according to QuickBooks) the quantity of the check is entered as a credit toward the seller specified.
Likewise, a negative balance within the A/R indicates that there are customers that your company owes money to. And again, there are legitimate reasons you’d credit a customer, but often it’s an error. The error that’s made is that a customer payment is recorded without a corresponding invoice being recorded. If the invoice isn’t recorded, then consistent with QuickBooks, this customer doesn’t owe you anything, upon receiving the payment and recording it, you now have a customer you owe money to, but not really.
NOW HOW DO I FIX IT?
As with all questions associated with accounting, the solution is, “that depends”. If these are current mistakes and therefore the bank accounts haven’t been reconciled as of yet, the tactic of correction is straightforward. For the A/P, search for the Pay Bills and enter within the same check number that you simply used earlier and pay the bill therein screen. the small ‘oh-oh’ screen will crop up telling you that this check number is already used, ignore it and use that number anyway. Once you are through with all of those entries, return to the register and appear for those identical check numbers, those entered correctly will have BILL PAYMENT within the box below the check number, delete the one without that designation and you’ll have completed the task. Fixing the A/R isn’t much different, (assuming that the reconciliations haven’t been completed!) enter an invoice dating back to the time of the payment received for whatever that customer ordered. The invoice will counter the credit received and can bring the balance out of the negative to zero, unless the customer in fact , still owes you for work done.
WHAT IF EVERYTHING IS RECONCILED?
If the negative balances go back into months that have previously been reconciled and therefore the bank statements and QuickBooks match, deleting these payments by customers and reentering them and applying them to invoices will throw off all reconciliations for the remainder of the year. you’ll then need to re-reconcile the bank accounts which are often tedious.
For A/P corrections after reconciliations, don’t DELETE THE BILLS! we’ve to be a touch creative with this so here goes. First, create a fake bank account; call it Adjustment Bank or First Bank of David, whatever you would like. attend the Pay Bills screen and use the fake checking account to pay the bills you’re sure have already been paid.
Once you’ve completed the entries, make a fake deposit from an account called adjustment into the fake checking account for that very same amount of the already paid bills. This effectively zeroes out the checking account, which you’ll then make inactive.
For A/R corrections after reconciliations, since the amounts have already been received and deposited into the proper checking account that has already been reconciled, simply entering in matching invoices to catch up on the received funds won’t affect the checking account, and thus won’t affect the reconciliations already done. Just confirm to tie out the payment to the invoice number you create by using the invoice number within the payment memo box. Since the quantity won’t change, you will not need to worry about affecting the reconciled transactions.
See also-:Sage 50 Balance Sheet Carry Over Error
CONCLUSION
Admittedly, this is often not the perfect solution, and if you simply have a couple of those transactions and it won’t require a whole year of re-reconciliations, you ought to roll in the hay a great distance. However, this manner gets you done sooner and lets you get on with the day to day business you’re keen on trying to do . I hope this helps you together with your QuickBooks issues.
