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Level 3

Child and Parent Account Asset

Situation:

 

We have a parent asset bank account # A and two children accounts #A.1 and #A.2.

 

The bank reconciliation through my review of historical records were done only to the parent account #A.

No adjustments where made to children accounts #A.1 and #A.2 since about 8 years.

 

The parent bank account was recently closed during current year.

 

From the perspective of the QuickBooks register, the #A (parent account) correctly has $0.00 balance. However, #A.1 incorrectly has a balance of $300,000.00 and #A.2 incorrectly has balance of $75,000.00 (numbers are for illustrative conceptual  purposes only and are not real amounts).  

 

However, when reviewing the Standard Financial Balance Sheet, it looks like as follows:

#A.1 $300,000.00

#A.2 $75,000.00

#A-OTHER -$375,000.00

-----

#A Total $0.00.

 

From the Previous Reconciliation Report it appears that the children accounts (#A.1 & A.2) were never reconciled and only the parent account #A was reconciled.

 

The closing parent reconciliation has a register balance and ending balance of $0.00.

 

The Reconciliation Discrepancy Report did not have any items flagged for the parent account.

 

It's a bit confusing when the account from the perspective of the balance sheet appears negative whereas the parent account from the perspective of the register does not.

Does the register parent account include transactions for the children accounts, but not vice versa?

 

Desired Outcome:

 

What are your thoughts to (1) fix the parent and children accounts in the register and have that flow through correctly to the presentation in the balance sheet.

 

 

Solved
Best answer August 14, 2020

Best Answers
Highlighted
Community Champion

Child and Parent Account Asset

Looking at the original numbers you posted, would I be correct in assuming there are no duplicate entries in the three Accts?

 

#A.1 $300,000.00

#A.2 $75,000.00

#A-OTHER -$375,000.00

 

And not knowing how well you know QBs, let me just say that when you create Sub Accts, QBs assumes you will put all the transactions in the Subs.  When you don't QBs creates the "Other" for the reports on what is in the Primary Acct. 

 

Looking at the numbers, it appears that you might just be able to Merge the Subs into the Primary and have one Acct.  Of course, I'm saying that sitting here without actually seeing the transactions.  But if it does look like there are no duplicate entries, then it might be a consideration.

 

Before attempting be sure to BACKUP through QBs and then I'd recommend making a copy of the Folder were your Company File is located.

 

And yes, a lot of people may jump on me for the suggestion.  But that's why you make a copy of the Folder before you start.  If it doesn't work, you don't even have to go through the process of recovering from a QBs BU.  Which *usually* does work, but not as reliable as an direct copy of the Folder. 

 

If you want to give it a try and are not sure of the steps, let me know.  Best case is you have one Bank Acct with no Subs which still has a $0 balance.  Worse case, you have to close QBs, copy the folder back to overwrite your changes and you're back to where you started.

 

View solution in original post

11 Comments
Highlighted
Community Champion

Child and Parent Account Asset

Interesting setup.  And I don't think I have an answer, but just wanted to clarify a few things.

 

Generally a Bank Acct has no Subs, it is a single entity at the bank and should be a single Acct in QBs.  But I'm guessing your A1 & A2 represent the portion of that account that is belongs to each of group/individual.  Correct?

 

I think I would have set up the equivalent to two Trust Account in QBs for A1 & A2 to show their transactions and balance.  But it would flow through the real bank account since we're talking real money.  

 

And there's really no reason that cannot happen with your Sub accounts.  First question is if this was an active account with hundreds (thousands?) of entries?  Or more of a distribution account.  If there are not a lot of entries, you could move the entries to the correct sub account for historical purposes.

 

But I'll assume that would be a long process, so you could just make some journal entries to show the correcting Credits & Expenses for each Sub to $0 it out.  And this is the point I'll recommend you check with your accountant.  You could put in a couple of entries only to find your accountant needs they broken into a multiple entries for taxes or some other reason relevant to the individuals or the company. 

 

Good luck and I'd love to hear what  the ultimate resolution was.

 

Highlighted
QuickBooks Team

Child and Parent Account Asset

Hey there, @User_20200731.

 

Thanks for reaching out to the Community. 

 

To answer your question, yes, the register parent account includes transactions for the children accounts, but not vice versa. This is why the previous person reconciled only the parent account. 

 

At the end of your post you state "What are your thoughts to (1) fix the parent and children accounts in the register and have that flow through correctly to the presentation in the balance sheet.", since we know that the parent account includes the transactions for the children accounts, what is your end goal to do with these accounts? Knowing just a few more key details will allow me to assist you in meeting your goal. 

 

I'll be sure to keep an eye out for your response. Feel free to let me know if you have additional questions or concerns. Take care! 

Highlighted
Level 3

Child and Parent Account Asset

It seems that there was an attempt to keep track of unrestricted (A1) and restricted funds (A2) (think non-profit) at the parent bank account allocated through the children account.

 

This issue on day one on my onboarding, but I’ve not found a good solution on the QuickBooks community that addresses this unique scenario.

 

I would have to go back quite a few years to review activity between the parent and children accounts. Not ideal, but if necessary, of course I’ll invest the time for the research.

 

There are not hundreds of thousands of entries, but there is potential if I increase my scope to include some overlap when last modified, to be a few thousand entries (probably less than 3,000).

 

Initially, I was thinking about debiting the parent account and crediting the children. However, the problem is that the parent account shows a $0.00 in the register whereas the children do not have a $0.00 balance in the register and the children accounts were never reconciled per my records in the QuickBooks historical records.

 

Let’s start with this as a continuing point for the tread. How does the child registers of a parent register appear on the parent's register?

 

This will greatly help me out with my research.

 

Thanks!

Highlighted
Level 3

Child and Parent Account Asset

My end goal is to have all three registers at $0.00.

Highlighted
QuickBooks Team

Child and Parent Account Asset

Thanks for getting back to us, @User_20200731.

 

You can create a credit card credit for the balance of the credit card. This way, you can zero out the children accounts in the register. I'll guide you how:

 

  1. Go to the Banking menu.
  2. Choose Enter Credit Card Charges.
  3. Click the Refund/Credit radio button.
  4. Enter the necessary information.
  5. Hit Save and New.

 

For more detailed steps, you can refer to this article: Set up, use, and pay credit card accounts

 

You can also run the Transaction List by Vendor report. This report will help you view the credit card charges entered in QuickBooks Desktop (QBDT).

 

Also, I've included a guideline on how you can properly reconcile your accounts in QuickBooks Desktop (QBDT): Learn reconcile an account in QBDT.

 

Please know that you can always get back to this post if you have additional questions. I'm always here to lend a hand.

Highlighted
Level 3

Child and Parent Account Asset

I disagree with this solution. The problem is with bank account  and not credit cards.

This is a bank account parent with two bank account children. There was no credit cards in this thread.

 

Please review and provide additional guidance. @Joesem M 

 

Thanks!

Highlighted
QuickBooks Team

Child and Parent Account Asset

Thank you for getting back here, @User_20200731.

 

The sub-accounts will impact the parent account balance. If the balance of the parent offset the balance of the sub-accounts then, the parent will zero out while there's a balance on the sub-account.

 

To fix this, you can create a bank transfer to move the balance from the subaccounts going to the parent. As a result, this will zero or move some balance in the subaccounts.

 

Here's how:

 

  1. Go to the Banking tab.
  2. Select Transfer Funds.
  3. In the Transfer Funds From field, select the subaccount.
  4. From the Transfer Funds To section, pick the parent account.
  5. Enter the amount you need to move in the Transfer Amount box.
  6. When done, click Save & New. Then, perform the same process to the second subaccount.

 

For your future reference, you may consider reading this article to guide you in reviewing your accounts to make sure they match your real-life bank statements: Reconcile workflow in QuickBooks. 

 

Feel free to post a reply below if you have further questions. I'm always around to help. Stay safe and take care always.

Highlighted
Level 3

Child and Parent Account Asset

@DivinaMercy_N Please confirm if I'm understanding the system programming correctly.

 

So if I do the Transfer Funds from the children registers to the parent register, even though the parent register is currently $0.00, after the transfer the parent register will still be $0.00 and the children registers will be $0.00 because the parent register includes transactions from the children registers but the children registers do no contain any unique transactions from the parent register, correct?

 

If not correct, please further advise the parent child register relationship how the registers ebb and flow.

 

Thanks!

Highlighted
Moderator

Child and Parent Account Asset

You're on the right track, @User_20200731.

 

Creating a parent and sub-accounts or children accounts matters because of how they post your transactions. Parent accounts balances include all your children's account transactions while children's accounts do not. Here's an article you can read to learn more: Create subaccounts in your chart of accounts in QuickBooks Online.

 

For additional information about how the system works with transferring your funds between two accounts, you can consider reading this article to learn more: Transfer funds between accounts.

 

Lastly, I've got you this helpful article for ideas about how you can review a transaction in any account register: Find, review, and edit transactions in account registers.

 

If there's anything else that I can help you with, let me know in the comments. I'll be here to lend a hand.

Highlighted
Community Champion

Child and Parent Account Asset

Looking at the original numbers you posted, would I be correct in assuming there are no duplicate entries in the three Accts?

 

#A.1 $300,000.00

#A.2 $75,000.00

#A-OTHER -$375,000.00

 

And not knowing how well you know QBs, let me just say that when you create Sub Accts, QBs assumes you will put all the transactions in the Subs.  When you don't QBs creates the "Other" for the reports on what is in the Primary Acct. 

 

Looking at the numbers, it appears that you might just be able to Merge the Subs into the Primary and have one Acct.  Of course, I'm saying that sitting here without actually seeing the transactions.  But if it does look like there are no duplicate entries, then it might be a consideration.

 

Before attempting be sure to BACKUP through QBs and then I'd recommend making a copy of the Folder were your Company File is located.

 

And yes, a lot of people may jump on me for the suggestion.  But that's why you make a copy of the Folder before you start.  If it doesn't work, you don't even have to go through the process of recovering from a QBs BU.  Which *usually* does work, but not as reliable as an direct copy of the Folder. 

 

If you want to give it a try and are not sure of the steps, let me know.  Best case is you have one Bank Acct with no Subs which still has a $0 balance.  Worse case, you have to close QBs, copy the folder back to overwrite your changes and you're back to where you started.

 

View solution in original post

Highlighted
Level 3

Child and Parent Account Asset

Quite a few journal entries for reclasses. The parent account was correctly reconciled and closed.

However, the issue was with the children accounts and related sub classes. @Pete_Mc 

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