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Advanced troubleshooting for balance sheets out of balance

SOLVED•by QuickBooks•3•Updated over 2 years ago

Here are some ways to narrow down the transaction or transactions that are causing your balance sheet to go out of balance.

If you haven't already, you should try to Fix a balance sheet that's out of balance before you continue.

Run reports to find the transaction or transactions causing the problem

Important: Run the following reports one at a time to hunt down the transactions. Once you find the transactions that cause your balance sheet to go out of balance, you should re-date them to 20 years in the future. If that doesn't fix your balance sheet, try deleting and reentering them.

Step 1: Run a Customer Report

  1. Go to the Reports menu, then select Custom Reports and then Transaction Detail.
  2. The Modify Report window opens automatically. If it doesn't, you can select Customize Report, then just go to the Display tab.
  3. On the Display tab:
    1. Set the Report Basis to Accrual.
    2. Set the From and To fields to the day the Balance Sheet goes out of balance.
    3. Set Total by to Customer.
  4. Go to the Filter tab, then:
    1. On the Filters list, select Transaction Type.
    2. From the Transaction Type drop-down, select Multiple Transactions, then mark Invoice, Credit Memo, and Payment.
    3. Select OK.
  • If the total is the amount by which the Balance Sheet went out of balance on this date: Find the customer who has a non-zero (positive or negative) sub-total. This customer has damaged transactions.
  • If the total is non-zero (positive or negative) and not the amount by which the Balance Sheet went out of balance on this date: Add other transactions to the Transaction Type filter such as Journal Entries and Checks.

Step 2: Run a Vendor Report

  1. Go to the Reports menu, then select Custom Reports and then Transaction Detail.
  2. The Modify Report window opens automatically. If it doesn't, you can select Customize Report, then just go to the Display tab.
  3. On the Display tab:
    1. Set the Report Basis to Accrual.
    2. Set the From and To fields to the day the Balance Sheet goes out of balance.
    3. Set Total by to Customer.
  4. Go to the Filter tab, then:
    1. On the Filters list, select Transaction Type.
    2. From the Transaction Type drop-down, select Multiple Transactions, then mark Bill, Bill Credit, and Bill Payment.
    3. Select OK.
  • If the total is the amount by which the Balance Sheet went out of balance on this date: Find the vendor who has a non-zero (positive or negative) sub-total. This vendor has damaged transactions.
  • If the total is non- zero (positive or negative) and not the amount by which the balance sheet went out of balance on this date: Add other transactions to the Transaction Type filter such as Journal Entries.

Step 3: Run a Journal Report

  1. Go to the Reports menu, then select Accountant and Taxes and then Journal.
  2. Select Customize Report, then go to the Display tab.
  3. Set the Report Basis to Accrual.
  4. Set the From and To fields to the day the Balance Sheet goes out of balance.
  5. Select OK. Note: The Debit and Credit Totals won't match which confirms that you have the right date when the Balance Sheet is out of balance. You need to find the specific transaction/s that show the debit total not matching with the credit total, or that one of its accounts is blank under the Account column. Open that transaction, then delete or recreate it as necessary.

Step 4: Run a report for Other transactions

  1. Go to the Reports menu, then select Custom Reports and then Transaction Detail.
  2. The Modify Report window opens automatically. If it doesn't, you can select Customize Report, then just go to the Display tab.
  3. On the Display tab:
    1. Set the Report Basis to Accrual.
    2. From the Dates drop-down, choose All.
    3. Set Total by to Account List.
    4. From the Columns list, mark Item.
  4. Select OK.
  5. Scroll to the bottom of the report. If the last group of transactions has the heading No accnt and the Account column is blank, then these transaction targets have no accounts assigned to them. To fix this:
    1. Go to the Lists menu, then select Item List.
    2. Right-click the item, then select Edit Item.
    3. Change the Account, then select OK.
    4. Repeat steps ii and iii change the Account back to the original account. Select OK.
  6. Repeat step e for each transaction that doesn't have an account.

Common issues that can throw a balance sheet out of balance

Determine if a certain type of transaction is putting the Balance Sheet out of balance. Some of the transactions you need to look for are:

An inventory return and discount on an invoice

Possible Scenario Recommended Fix
  • You sold one or more inventory items.
  • Your customer returned one or more inventory items.
  • You have a discount item.
  1. Create a new invoice for the sale and the discount.
  2. Create a credit memo for the inventory return.
  3. Link the credit memo to the invoice in Receive Payments.

A discount entered at the customer level and applied at the job level

Possible Scenario Recommended Fix
  • You have a customer with several jobs. You completed all of the jobs and invoiced the customer, including all the jobs on the invoice.
  • You received payment for the invoice, but your customer included a discount for Job A in the payment.
  • You recorded the payment against the invoice and entered the discount on the Discount/Credit tab.
 You need to re-enter the payment and split it among the jobs, then enter the discount at the job the level to match the invoice.

A journal entry linked to a credit memo

Possible Scenario Recommended Fix
You have an open Credit Memo and you entered an offsetting General Journal Entry (GJE), then linked it to the Credit Memo.
  1. Edit the Journal Entry.
  2. Move the A/R account to the source line, usually the first line of the GJE.
  3. Save the GJE and make sure it is still linked to the Credit Memo.

Unconventional inventory transactions

Possible Scenario Recommended Fix
  • You have transactions that adversely affect inventory such as:
    • Transactions that drive your Quantity on Hand negative.
    • Transactions that change the Quantity on Hand for previously entered assemblies and cause the assemblies to be marked pending.
    • Washing Transactions with (+) and (-) units of the same item on the same price.
    • Transactions that use a damaged item, damaged customer, or damaged vendor.
  • You have a negative inventory that affects your Cash Basis Balance Sheet. You tried doing basic data damage troubleshooting on your company file however, when you enter inventory transactions again, your Balance Sheet becomes out of balance again.
  1. Correct transactions causing the Balance Sheet to be out of balance. Note that this may affect financial statements for previous periods.
  2. Start a new data file.

If the issue started after upgrading to a new version of QuickBooks, you can:

  1. Reinstall the old version.
  2. Restore a backup created before upgrading.
  3. Prepare the restored data file for upgrade.
  4. Upgrade your data file again into the new version.

If the transaction appears to be damaged, or is causing the imbalance without being one of the types of transactions listed above, either delete and recreate the transaction or click here for other recommended troubleshooting steps.

Check and resolve specific forms of data damage

If there are no transactions causing the Balance Sheet to be out of balance, you may have some data damage that the usual data damage troubleshooting cannot fix. The options listed below provide some specific forms of data damage troubleshooting you can do. These are rare and the steps to do them may be complex. Make sure you have created a backup before going through any of them.

  • Balance Sheet Summary is out of balance while the Balance Sheet Detail is in balance or vice versa.

    If both reports have the same basis and the same date range, then you may have a damaged account. To resolve this, identify the damaged account and merge it into a new one.

    1. Compare the two reports. Find the account/s having two different amounts on the two reports.
    2. Merge the damaged account into a new account.
      Note: You can only merge accounts that are the same type. For example, you can't merge an "Income" type account with an "Other Income" type account.
      1. Go to the Lists menu, then select Chart of Accounts.
      2. Right-click on the damaged account, then select Edit Account.
      3. Add an asterisk (*) to the name of the account, then select Save & Close.
      4. Right-click anywhere, then choose New. Recreate the original account with its original name. Select Save & Close when you're done.
      5. Right-click on the original account, then select Edit Account.
      6. Remove the asterisk (*) from the name.
      7. Select Yes to confirm that you want to merge the two accounts.
  • Your Accrual Basis Balance Sheet is in balance for Dates = All Dates, but out of balance for any other date range.
    1. Back up the QuickBooks company file
    2. Go to the Lists menu then select Chart of Accounts.
    3. Right-click the Uncategorized Expense account, then select QuickReport.
    4. Select Customize Report. From the Dates drop-down, select All.
    5. Go to the Filters tab, then from the Filters list, select Posting Status.
    6. Select Either, then select OK. Search for transactions with an amount but with no item or account.
    7. Repair each transaction.
    8. Repeat step 7 until you have verified each transaction, then rerun the Balance Sheet report.
  • Your accrual B/S is out of balance but your cash B/S is in balance.

    To fix this, you need to identify damaged income or expense accounts that have a balance but have no transactions, then merge them into new accounts.

    1. Determine the difference between assets and liabilities
      1. Go to the Reports menu, then select Company & Financial and then Balance Sheet Standard.
      2. Select Customize Report. From the Dates drop-down, select All, then set the Report Basis to Accrual.
      3. Write down the difference between the Assets and Liabilities & Equities.
    1. Locate the damaged account
    1. Export your Chart of Accounts, then open the file in Microsoft Excel.
    2. Highlight the first two rows of the spreadsheet, then delete them. These are header rows that you do not need.
    3. Highlight Column G onwards, then delete them. These columns are not needed for our purposes. You should see OBAMOUNT in Column F, Row 1.
    4. Select the cell above Row Header 1 and left of Column Header A to highlight the entire spreadsheet.
    5. Sort the entire spreadsheet by Column F.
    6. Find the row whose Column F amount is the difference between the Assets and Liabilities & Equities.
    7. Be sure to write down the name of this account.
    1. Fix the damaged account
    1. In QuickBooks, run a QuickReport for All Dates on the account noted in Step 3B-8. above.
    2. If there are no transactions then this is the problem account.
    3. There should be no balance if there are no transactions.
    4. Create a check for one cent ($0.01) to this account.
    5. Run the basic data damage troubleshooting on the company data file.
    6. QuickZoom (double-click) on the account and delete the check for one cent.
    7. Run the accrual basis balance sheet to be sure it is in balance.
  • After Condensing your data, your balance sheet is out of balance and the JE's show amounts without associated accounts (applies to US only).

    This issue may occur if you change the associated account on a payroll item after it was used on a paycheck and then run the Condense utility. To fix this, you need to correct the affected Journal Entries.

    1. Restore your company data file from the backup you made before you condensed your data.
    2. Create a Transactions List by Date report. Go to the Reports menu, then select Accountant & Taxes and then Transactions List by Date.
    3. Filter the report for Transaction Type: Journal and All Dates.
    4. Scroll down and find any Journal Entries showing an amount without an associated account.
    5. Double-click the report entry to open the Make General Journal Entries window. (Optional) To print the entry for reference before you delete it, choose the Print icon near the top of the window.
    6. From the Edit menu, choose Delete General Journal.
    7. From the Edit menu choose New General Journal, and then re-record the journal entry you deleted in the previous step, entering the correct account.
    8. Select Save & New, and then repeat Steps 5 through 8 for the other affected Journal Entries.
  • One column setting (e.g. Total Only) shows out of balance, other column settings (e.g., by Year) show in balance.

    When viewing a Balance Sheet, total assets match total liabilities and equity in some column views, but not in others. For example, the report balances when you set columns to display Total only, but the report does not balance when you set columns to display by Year. One or more of your accounts may be damaged.

    To fix this, identify the damaged account and merge it into a new one.

    1. Determine which view of the report data is out of balance:
      1. From the Reports menu, choose Company & Financial, then Balance Sheet Summary.
      2. Select the Dates drop-down arrow and choose All.
      3. Select OK to display the balance sheet.
      4. From the Columns drop-down arrow, choose Total only and note whether Total Assets match Total Liabilities and Equity.
        1. If the totals do not match in at least one column, note the column heading of the earliest instance where the totals do not match and continue with Step 2.
        2. If the totals match, continue with Step 1.E. 
      5. From the Columns drop-down arrow, choose Year and note whether Total Assets match Total Liabilities and Equity for all columns on the report.
        • If the totals do not match in at least one column, note the column heading of the earliest instance where the totals do not match and continue with Step 2.
        • If the totals match in every column:
          1. Repeat this step selecting progressively smaller time increments in the Columns field (Quarter, then Month, then Week, and then Day).
          2. Stop when Total Assets do not match Total Liabilities and Equity in at least one column on the report. Note the column heading of the earliest instance where the totals do not match and continue with Step 2.
    2. Identify the damaged account:
      1. Select the Reports menu, then Company & Financial and choose Profit & Loss Standard.
      2. Enter a date range in the From and To fields that match the column heading you noted in Step 1.e. For example, if the column heading was a year, enter the first and last dates of that fiscal year. If the column heading was a month, enter the first and last dates in that month.
      3. Select OK.
      4. Audit the integrity of each account on the report:
        1. Note the amount next to the first account displayed on the report.
        2. Double-click the amount to open the Transaction Detail by Account window.
        3. Scroll to the bottom of the report and note the total in the Balance column.
          • If it matches the account total on the Profit & Loss report, continue.
          • If it does not match the account total on the Profit & Loss report, note the account number and continue.
        4. Close the Transaction Detail by Account window.
        5. Repeat Steps 2.d.i through 2.d.iv for every account on the Profit & Loss report to create a list of one or more damaged accounts.
    3. Merge the damaged account(s) with new one(s).
  • Your B/S is out of balance on both Accrual and Cash bases.

    To fix this, identify and repair transactions that do not have accounts assigned. Run the following report:

    1. Run the Custom Transaction Detail report (Reports > Custom Reports > Transaction Detail)
    2. Set the Dates to All.
    3. Set the Basis to Cash.
    4. Set Total by to Account List.
    5. Add the Item column.
    6. Select OK.

    Scroll to the bottom of the report. If the last group of transactions has the heading No accnt and the Account column is blank, then these transaction Targets have no accounts assigned to them. Try the following:

    1. Open the Edit Item window for the Item.
    2. Change the Account and select OK.
    3. Reopen the Edit Item window.
    4. Change the Account back to the original account and choose OK.
    5. Repeat Steps 1 - 4 for each transaction on the above report that does not have an account.

Tips to keep your balance sheet in balance

Here are some things that can throw your balance sheet out of balance. Take extra care when dealing with these situations.

Inventory return and discount applied on an invoice

The invoice should include the sale and the discount. A credit memo needs to be created for the returned inventory. The credit memo is supposed to be linked to the invoice when you receive payment.

Journal entry linked to a credit memo

Be careful of linking journal entries to credit memos. If a journal entry causes the discrepancy, edit the journal entry and make sure A/R is the source on the first line. Check that the journal entry is still linked to the credit memo.

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