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Clearing out old transactions from Accounts Payable?

Forum|Forum|8 years ago
March 29, 2018
46 replies
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We need to clear down the A/R and A/P as there are some very old transactions dating back many years. We wanted to do one journal entry for everything, but I believe QBO only allows payment to specific customers/suppliers – is there any way around this?

Best answer by UKTopQuestions

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.

U

UKTopQuestionsAuthorAnswer

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.

C

Chester_Kay

In QBO how would you manage this for Accounts Receivable?

We have some historic customers who paid in advance and then did not use up all their credit. Under our ToS they are not eligible for a refund if any unused credit is unclaimed after a year ... so we need to charge-off these small overpayments (without sending an invoice or refund to the customer!).

Charlie

katherinejoyceO

Level 9

Thanks for joining this forum, @Chester_Kay. I'm here to share a few insights about how QuickBooks clear old transactions from accounts receivable (A/R).

Ideally, you'll need to record a refund to your customer using Cheque expense. In your case, since your customers are not eligible for a refund, you'll need to create a journal entry. Then, set the journal entry to reverse so it will offset the credits. Here's how:

Create a journal entry for Accounts Receivable

Go to the Plus(+) icon at the top right.
Under Other, select Journal Entry.
Select the Journal Date. Make sure to enter the date of the end of the time period.
Select the account affected by the invoice from the drop-down list in the Account column.
Enter the amount in the Debit column.
Enter the reason for this journal entry in the Memo field.
Select Accounts Receivable from the Accounts drop-down list. The amount will be entered automatically in the Credits column.
Select the customer from the drop-down list in the Name field.
Click Save and close.

Set the journal entry to reverse

Click the Search icon in the upper right.
Find the journal entry you created and click to open it.
Choose Reverse.
Edit the Journal Date to one day after the original journal entry's Journal Date.
Click Save and Close.

To ensure your books are accurate, I'd highly recommend you speak with your accountant. He/She should be able to provide you more expert ways of handling this situation.

Let me know if you have any other questions. We're always glad to assist. Take care.

J

john naddour

after paying these old bills, my clearing account has now a negative balance. is that right or should it be 0 balance always?

J

jamespaul

Level 8

Hello, John Naddour.

I'll give a short overview on handling the clearing account's balances. I'm also on the case to assist you in correcting this.

The clearing account should have zero balance after moving the funds and paying the bills.

It's possible that the funds weren't enough or there were bills that aren't supposed to be paid with the clearing account.

First, you'll want to check the transaction that was used to fund the account. Here's how:

Go to the Chart of Accounts page.
Find your clearing account, then click the Account history link.
Locate the transaction used to fund the account (this can be a journal entry or a transfer transaction).
Edit the amount if needed.

Second, check the bills that were paid. To locate them easily, you'll want to pull up the Bills and Applied Payments report. Simply go to the Reports page, then type Bills and Applied Payments in the search box.

Adjust the reporting date when needed. If there's a bill that was incorrectly included in the payments, you'll want to delete the payment transaction to correct this

Here's how:

On the report, open the bill payment transaction.
Click the More menu.
Select Delete.

If multiple bills are included in a single payment transaction, simply uncheck the correct one and adjust the amount.

Since these are old bills and you're using a clearing account, I recommend contacting an accountant. They can guide you with the corrections and ensure your books are accurate.

Do you also use the Online Banking feature? If you need help managing your other transactions, you can check this article for a guide: Categorise and match online bank transactions in QuickBooks Online.

I'll be on the look out for your reply if you have more questions about the processes in QuickBooks. I'll see you around in the Community space.

A

anjum

I have old Accounts Payable balances that I need to clear off using discount received account. I tried using Supplier credit to move it to Profit and loss account into Discount Received A/c and then link the Discount received with the outstanding balances from the bill. The ledger balances shows 0 and my Profit & Loss account is also credited. However, if i check my Balance sheet, such supplier still shows the outstanding balance of exact amount. though the transaction is there but it seems to be having no effect.

I also tried to use journal to move Trade payable balance to discount received and then link the journal with the bill. Again it does reduce my liability and credit my Profit & Loss account by equal amount. Yet it still shows as open balance in Trade payables for the Supplier though the total liability is reduced by such amount.

I desperately need your expertise.

MichelleBh

Level 8

We'll have to investigate this problem safely, anjum.

I appreciate all the steps you've taken so far to resolve the supplier balances. I'll make sure that the opening balance will fix without a moment's delay.

It looks like you've already done the actions to clear off the Accounts Payable in your QuickBooks Online. Based on all the steps you take, you should no longer have an open balance in the accounts payable.

With this, I'd recommend contacting our Customer Care Team. Our experts can initiate screen sharing to view your account securely and help you from there. They are available Monday -Friday, from 8:00 AM to 10:00 PM, and Saturday -Sunday, from 8:00 AM to 6:00 PM. Make sure to contact them within business hours to ensure a swift response.

Here's how:

Go to the Help menu, then click Contact Us.
Type your concern in the box and tap Let's talk.
Choose either Call us or Start a chat.
Complete the required data and submit the request.

For more insights about managing supplier credits in QuickBooks, please refer to these articles below:

Let me know if you have any other questions or concerns by leaving a comment below. I'll be more than happy to help. Don't work to hard, anjum.

A

anjum

Thank You for your response.

After having a nightmare and an almost anxiety attack, here is what I found. so we have two trade payables accounts. While the Invoice is being recorded in, say, Trade payable (1), The offsetting Entry is adjusted in the other Trade payable Account(2). So if i check the Net trade payable (1) for the supplier it is Positive balance and if i Check Net trade payable (2) is shows Negative balance of the same Supplier.
Now i tried to look for location tracking of the supplier but i dont have that feature... Which sucks.

Now i need your expertise in this area as how to reflect the double entry through a single Trade payable account.

Really appreciate your quick response.

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