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V
Val4884
August 30, 2023
Question

Negative Cash Account with old transactions

  • August 30, 2023
  • 2 replies
  • 23 views

Hello,

 

I have a new client. In looking at their chart of accounts, I noticed the cash account has a negative balance. The previous bookkeeper was putting transactions into the account because she didn't know where else to put them. Should I just leave this account alone as it is from last year and taxes have been filed?

2 replies

Rustler
Rustler
Level 15
September 4, 2023

QB is perpetual so that negative balance will move forward in the company. It needs to be zero'd out. You can use a journal entry to move that negative amount to retained earnings or owner equity.

Rainflurry
Rainflurry
Level 11
September 5, 2023

@Val4884 

 

You will need to review the transactions that caused the negative balance.  If you move it all to equity/retained earnings with a journal entry (debit cash, credit equity/retained earnings), that assumes all of the transactions were either income or expense transactions but it's very possible that they could/should have been asset or liability transactions and those may not impact equity/retained earnings.  The reversing entry(ies) can be made in 2023, but you will need to determine the nature of the negative balance.   

V
Val4884Author
September 6, 2023

Speaking with my client, it seems that these were entries made when the company first began using Quickbooks. It also looks like the entries were payroll related and the previous bookkeeper did not know where to put them.

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