Clearing old Accounts Receivable (A/R) and Account Payable (A/P) balances can be a little tricky. We can give you the information you need to get these balances taken care of, however, it would still be best to consult with your accountant to make sure what's best for you and your business.
The most efficient way to clear any payables is to pay it off. Aside from making journal entries, this includes creating a clearing account. The steps are similar to setting up a bank account in your chart of accounts, but without an opening balance.
Once you're ready, you can follow the steps below to clear off those A/P balances:
Create the appropriate journal entry:
1) Click the Plus sign (+), then choose Journal Entry.
2) In the Journal Entry window, change the date if necessary.
3) In the Account Field, choose Creditors from the drop-down list.
4) Enter the amount in the Debit field.
5)Tab to the name field and select the Supplier from the drop-down list.
6) In the next row, choose the off-setting or the clearing account in the Account field.
7) The amount in the Credit field should be equal to the amount in the Debit field.
8) Click Save & Close.
Apply the general journal entry to the existing balance:
1) Go to Expenses, and then choose Suppliers at the top.
2) Click on the supplier name, and look for the Bill to pay it.
3) Click the Make Payment button in the top-right corner. When the Bill Payment window opens, the Journal Entrywill be under the Credits section.
4) Select the Bill and the Journal Entry to link them.
5) Click Save & Close.
