A/r balance on cash basis caused by an old general journal entry. How do I get rid of it without affecting prior year financials?

blprestangen · ‎December 10, 2018

I have a balance in a/r on cash basis. I found that it was caused by a general journal entry at 12/31/x1 to dr a/r and cr revenue. They then reversed that entry on 1/1/x2. I don't know why it was done. How do I correctly clear that out without changing the financials?

qbteachmt · ‎December 10, 2018

There is nothing about a JE that cannot be done on AR as invoice or credit memo or payment.

So, look at it to understand what they are trying to accomplish. Then, delete it and recreate the right way, for the same date.

Debit AR and Credit Revenue = Invoice.

The Reversal is Credit Memo.

Have you tried Applying them to each other? Use Receive Payment for that customer name, leave the amount as 0.

The problem with using JE here is that this is bypassing Cash Vs Accrual basis and is a brute force accounting entry.

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qbteachmt · ‎December 10, 2018

There is nothing about a JE that cannot be done on AR as invoice or credit memo or payment.

So, look at it to understand what they are trying to accomplish. Then, delete it and recreate the right way, for the same date.

Debit AR and Credit Revenue = Invoice.

The Reversal is Credit Memo.

Have you tried Applying them to each other? Use Receive Payment for that customer name, leave the amount as 0.

The problem with using JE here is that this is bypassing Cash Vs Accrual basis and is a brute force accounting entry.

blprestangen · ‎December 10, 2018

Thank you for your answer qbteachmt. My initial thought was to do the same as you suggest and delete the entry and create the invoice on 12/31/x1 and then create the credit memo on 1/1/x2, but I was not comfortable doing that without knowing the background affects. (Like when you unapply a payment and then re-apply, it messes with the bank rec by changing the beginning balance and then makes you clear it out again in the current month.) I'd much rather have the entry be correct (invoice and credit memo and apply the cm to the invoice), I just want clarification/verification that when I delete the entry and enter the invoice on the same date (and the credit memo in the reversal date) it won't be messing me up in the future (ie in 2016, the here and now).

qbteachmt · ‎December 10, 2018

"Like when you unapply a payment and then re-apply, it messes with the bank rec by changing the beginning balance and then makes you clear it out again in the current month."

Huh; when I do that, the Banking entry does not unreconcile. If you delete it from the Deposit, that will happen; I have a method that prevents the unreconciliation for this, as well.

"I just want clarification/verification that when I delete the entry and enter the invoice on the same date (and the credit memo in the reversal date) it won't be messing me up in the future (ie in 2016, the here and now)."

You will parallel everything, and use items to control the flow to the accounts.

You WILL see a change, because that is what you want. The change will be the Cash Vs Accrual issue. It will now be Corrected :)

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A/r balance on cash basis caused by an old general journal entry. How do I get rid of it without affecting prior year financials?