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Journal Entry

Forum|Forum|3 years ago
July 15, 2022
2 replies
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Hi , the previous bookkeeper of my client made an erroneous entry of Dr Customer Advance Cr Checking Acct dated Dec 2019 for a transaction not even existed. To clear the negative balance of Customer Advance, i deleted the journal entry. It resulted to no more negative Customer Advance. Is it appropriate to delete the journal entry than to reverse it?

QuickBooks Online

Best answer by Rainflurry

I thought of that too. But the negative AR was applied the next year when service is rendered. So that leaves Customer Advance being negative balance.

@allen25glenn

OK, so now I think I see the issue.

The original entry (Dr customer advance, Cr bank account) needs to be reversed in the current period because, as you mentioned, it's an error. Obviously, there is no payment made when receiving a customer advance. That will zero out the customer advance balance and the two bank entries offset.

The reason the bank account is overstated in QB is that the payment received in QB was never deposited at the bank, correct? So, doesn't the customer still owe your client the prepayment? That should reconcile the bank account.

R

Rea_M

Level 10

Hello there, @allen25glenn.

I'll help route you to the best support who can identify if deleting a journal entry is more appropriate than reversing it in QuickBooks Online (QBO), so you can keep your financial data accurate.

Journal entries are the last resort for entering transactions. You can reverse it if you need to update or correct its entries. Then, delete it if you've created the entry by mistake.

However, to choose the appropriate action, whether to delete or reverse a journal entry, I would encourage you to consult with your accountant. They can provide expert advice and direction tailored to your business needs.

In case you already have an accountant and you want to add them to your QBO account, here's how:

Sign in to QuickBooks Online as a primary admin.
Go to Settings or Gear ⚙ icon and select Manage users.
Select the Accounting firms tab.
Click Invite.
Enter your accountant's info and select Save.

Now that your financial data is accurate, you may also want to visit one of our Help pages as your reference in managing your QuickBooks account and your business's growth and transactions using QBO: QuickBooks Help and Support. It includes QuickBooks Help articles, Community discussions, and video tutorials, to name a few.

If there's anything else you need, or you have other questions about managing transactions in QBO, I'm always ready to help. Take care, and I wish you continued success, @allen25glenn.

Rainflurry

Level 11

@allen25glenn

It is best to reverse it in the current period. If you delete the entry, you are changing balances from prior closed periods that were reported on your financial statements and tax returns.

A

allen25glennAuthor

I also tried that reversing on the current period but the Checking account resulted to a difference from quickbooks balance vs bank balance. How will I solve that?

Rainflurry

Level 11

@allen25glenn

If the original entry was made in error, then your actual bank account balance should be higher than your QB bank balance by the amount of the journal entry because the transaction never when through the bank and should not have been cleared in QB. Is that not what you see?

Reversing the entry in the current period creates a bank deposit (debit) that can be used to clear against the outstanding, uncleared, journal entry made in error.

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