Resolve A/R or A/P balances on a cash basis Balance Sheet

Learn how to fix an Accounts Receivable or Accounts Payable balance on a cash basis Balance Sheet.

An issue with the balance is typically caused by one of two things: an accounts payable or accounts receivable transaction has affected the Balance Sheet account, or there’s an unapplied payment.

Transaction affecting a Balance Sheet account #

Create a journal entry for Accounts Receivable #

To create a journal entry for an Accounts Receivable balance:

  1. Select + New.
  2. Select Journal Entry.
  3. Enter the Journal Date. The Journal Date is the date of the end of the time period.
  4. On the first line, select the account affected by the invoice from the drop-down list in the Account column.
  5. In the Debit column, enter the amount.
  6. Enter the reason for this journal entry in the Description field.
  7. In the second line, select Accounts Receivable from the Accounts drop-down list. The amount should be automatically entered in the Credits column.
    Note: If you are splitting this over several customer accounts, change the amount to reflect a single customer’s sales tax.
  8. Select the customer from the drop-down list in the Name field.
  9. Select Save and close.

The journal entry is created.

Create a journal entry for Accounts Payable #

To create a journal entry for an Accounts Payable balance:

(Note that for offsetting A/P or vendor balances, the “Credit” account type  is usually Expense or Liability. But it’s really important than an accountant be consulted. Same with A/R adjustment)

  1. Select + New.
  2. Select Journal Entry.
  3. Enter the Journal Date.
    The Journal Date is the date of the end of the time period.
  4. On the first line, select the expense or liability account affected by the bill from the drop-down list in the Account column.
  5. Enter the amount in the Credits column.
  6. Enter the reason for this journal entry in the Description field
  7. On the second line, select Accounts Payable from the Accounts drop-down list. The amount should be automatically entered in the Debit column.
  8. Select the Vendor from the drop-down list in the Name column.
  9. Select Save and close.

The journal entry is created.

Set the journal entry to reverse #

Once the Accounts Receivable or Accounts Payable journal entry is created, you must set it to reverse:

  1. Select Search icon on the toolbar.
  2. Locate the journal entry you created and select it to open it.
  3. Select Reverse.
  4. Change the Journal Date to one day after the original journal entry’s Journal Date.
  5. Select Save and Close.

The journal entry you created will be reversed as you specified.

Unapplied payments #

The second most common cause of a balance in Accounts Receivable or Accounts Payable is unapplied payments.

Bill payments that are not applied to bills, or Receive Payment entries that are not applied to invoices affect Accounts Payable and Accounts Receivable negatively. You can correct this situation by opening the payments from the Customer or Vendor registers and applying them.

Occasionally unapplied payments are caused when you do not enter the corresponding invoices or bills. To correct this situation, you must enter the missing invoices or bills before you can apply the payments to them.

The following sections provide information about finding and addressing unapplied payments.

Find unapplied payments #

To find unapplied payments, review the Customer Balance Detail or Vendor Balance Detail report.

  1. Go to the Reports menu.
  2. Locate and select either the Customer Balance Detail or Vendor Balance Detail report.
  3. Review the report to identify any unapplied payments.

Once you have identified unapplied payments, you can apply them in Accounts Receivable or Accounts Payable.

Apply payments in Accounts Receivable #

  1. Go to Sales.
  2. On the All Sales tab, select Filter.
  3. Select Money received from the Type drop-down list.
  4. Select a Customer name from the list.
  5. Select Apply.
  6. Locate and select the unapplied payment to open the Receive Payment window.
  7. In the Outstanding Transactions section, select the invoice or invoices the payment should be applied to.
  8. Select Save and close.

The payment is properly applied.

Apply payment in Accounts Payable #

  1. Go to Expenses.
  2. On the Expense Transactions page, select Filter.
  3. Select Recently Paid from the Type drop-down list.
  4. Select Apply.
  5. Select the unapplied bill payment from the list to open the Bill Payment window.
  6. From the Add to Bill Payment panel, select Add for the bills to apply the payment to.
  7. Select Save and close.

The payment is properly applied to the bill.

Review Transaction Reports #

The Transaction Report can show you the customer or vendor balance that creates a total in Accounts Receivable or Accounts Payable.

  1. Go to Reports.
  2. Locate and open the Balance Sheet report.
  3. Select the amount listed for the Accounts Payable or Accounts Receivable account to open Transaction Report for that account.
  4. Select Customize.
  5. In the Customize report panel, select the Rows/Columns item to open the section.
  6. From the Group by drop-down list, select Customer for Accounts Receivable or Vendor for Accounts Payable.
  7. Select Run report.

You can use the information in the report to identify the cause of the balance and decide what action is necessary.

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