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sarah-cooldudes123
Level 1

If I void an invoice from a previous period in Quickbooks, how will that be recorded?

Our company has split and some of the invoices were taken with the parting partner. How do I safely reverse these invoices from a previous period to adjust our GST payable
2 Comments 2
Trish_T
QuickBooks Team

If I void an invoice from a previous period in Quickbooks, how will that be recorded?

Hi sarah-coolabode-,

 

Welcome to Community!  It's important that you're able to accomplish your bookkeeping goals in QuickBooks Online, with confidence.  Making any changes to previously recorded transactions can have a negative impact on other areas of your books.  In this situation, I encourage you to reach out to an accounting professional for their expertise and best course of action.  If you don't have an accountant, we can help you locate a ProAdvisor in your local area.  

 

Feel free to reach out again, with other questions.  We'd be glad to help!

CLaTAX
Level 1

If I void an invoice from a previous period in Quickbooks, how will that be recorded?

When you void the invoice, QuickBooks will automatically create a corresponding credit memo to offset the invoice. Let's go through an example of voiding an invoice in QuickBooks and how it would be recorded. 

 

Example:

For this example, we'll assume you're using the accrual accounting method and that the invoice contains GST. We'll also assume a simplified scenario.

 

Step 1: The Original Invoice

  • You issued an invoice to a customer in April for $1,000, which includes $100 in GST.
  • This created the following journal entry:
    • Debit Accounts Receivable: $1,100 (the total invoice amount including GST)
    • Credit Sales Income: $1,000
    • Credit GST Payable: $100

 

Step 2: Voiding the Invoice in May

  • In May, you realize that the invoice needs to be voided because of a dispute with the customer.
  • You void the invoice in QuickBooks, which automatically creates a credit memo.
  • The credit memo offsets the original invoice, and the journal entries are as follows:
    • Debit Sales Income: $1,000 (to reverse the income)
    • Credit Accounts Receivable: $1,100 (to reduce what the customer owes)
    • Credit GST Payable: $100 (to reverse the GST payable)

 

Now, let's see the impact on your financial records after voiding the invoice:

 

Income Statement (for May):

AccountBefore VoidingAfter Voiding
Sales Income$1,000$0
Total Revenue$1,000$0

 

Balance Sheet (as of the end of May):

AccountBefore VoidingAfter Voiding
Accounts Receivable$1,100$0
GST Payable$100$0

 

  • Your income statement shows that the $1,000 in revenue from the original invoice has been reversed, so it no longer appears in your income for May.
  • Your balance sheet shows that the customer's accounts receivable have been reduced to zero, indicating they no longer owe you money for this invoice.
  • The GST payable account has also been reduced to zero, as you've reversed the GST liability associated with the voided invoice.

 

Remember to keep detailed records of this transaction for your records and potential tax purposes. The specific accounts and amounts may vary depending on your chart of accounts and the way your QuickBooks is set up, so it's essential to consult with a professional to ensure the proper handling of such transactions in your specific situation.

 

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