How do I edit a transaction in a closed year?

Great question, @trula.

You can re-open the closed periods any time by clearing the closing date.  Then, you should be able to make changes to class as needed.

Once you've made your necessary changes, you can once again close out the year to close your books to prevent unwanted changes. This locks your books so no one can edit your accounting data before the closing date.

You can check out this article on setting a new closing date within your QBO account: Close your books in QuickBooks Online.

Let me know if I can help with anything else, I'm just a post away! Take care.

A client created the check deposit via "Add funds to this deposit" screen in QBO for correct payment amount of $5100 (check no. 1002) dated 5/15/20 (closed period)  that was supposed to be payment for invoice #1234. The emphasis is that this happens to be in a closed period.

a) I verified and check no.1002 has cleared back in 5/15/20 (closed period) for $5100.

b) also noticed a JE was posted in a closed period to record this $5100 check that (debits bank and credits services income) due to missing check at the time which client didn't record in first place since check found on 9/21/21. Doesn't this create a problem because it duplicates revenue/services, at least for the original invoice amount of $5000 and payment for $5000 matched against the invoice, aside from the $5100 check payment recorded via journal entry which is correct amount that cleared?

c) Invoice #1234 dated on 6/10/20 (closed period) was for incorrect due amount of $5000 and therefore received for incorrect payment on date of 3/1/21 (closed period) which are also uncleared transactions.

d) Since revenue (or services income I believe) is increased by the invoice from prior year 2020, then wouldn't adding the deposit as recorded by client in "Add funds to this deposit window" duplicate the revenue and/or services income again? 

e) This concludes that clients customer has overpaid since check for $5100 - $5000 = $100 in refund owed to the customer.

f) I attempted to create a credit on customers account via bank deposit in "Add funds to this deposit" screen.  (1st line item received from customer name, account has been changed from Services to Accounts Receivable, and Amount for $5100 and (2nd line item selected Account: Services and negative amount for -$5000) which I figured creates the $100 owed to customer. Instead, I am now seeing a credit of $5100.

g) Problem is I saved and closed the changes made, despite the alert I also got for it being in a closed period.  

h) Even if changing those amounts to come up with the $100 credit doesn't allow since QBO alerts that "you must specify a transaction amount that is 0 or greater. Is this because I am making changes in a closed period? Do these changes also affect my reconciliation for May 2020 when the check cleared? Please let me know if there are specific actions needed to correct these changes saved in closed period? Thanks.

Thank you for contacting us and sharing how transactions are recorded in a closed year, set up a loan.

Any changes in a closed period will affect the balances of the reconciled accounts. The alert is for a deposit with a negative amount. Hence, it doesn't matter if it's on the closed period or not. 

We don't recommend making changes to the closed period since the accounts are already reconciled. However, if you need to correct the entry, you can delete the journal entry and other incorrect transactions.

Then, undo the entire reconciliations and review all transactions to make sure the records are correct and balance. Once done, you can start reconciling again those bank accounts.

Let me know if you need additional information about correcting transactions made in the closed period. I'll be around to help you.

As an update here are changes I went back and made for the closed year I suppose did not change anything:

1) I updated bank deposit in the "Add funds to this deposit" window which client originally recorded recently on 9/3/21. This shows only 1 line item received from (customer name), account (services income) and amount for $5100 instead of those 2 line items mentioned earlier.

2) adjusting journal entry was recorded on 5/15/20, which was used in the closed period for the reconciled report as debit to bank and credit to services income

3) Looking at these, it double counts the services income. Therefore, should we leave the journal entry that was reconciled in the prior year and delete the deposit check payment of $5100 recorded earlier by client?

4) Also, the invoice #1234 for incorrect amount due for $5000 was matched against incorrect payment amount of $5000 during the closed period.  Plus, we still need to account for the credit which customer overpaid by $100 (due to the $5100 customer check payment on 5/15/20  minus $5000 incorrect invoice amount) which should have been matched against the invoice, thus creating that credit. However it was recorded via journal entry as a debit to bank and credit to services income.  

5) This leads to my next question whether there a correct way of recording the refund receipt owed to customer for $100 without affecting the closed period? Thanks for any input.

I appreciate the details that you've shared, @set up a loan.

Let me provide additional insights about managing a close books in QuickBooks Online.

The process that you made is correct, you'll need to record a refund for the overpayment of the customer. Know that any changes made on a closed book will affect its balance.

To get this matter sorted out, you may consider re-opening the closed books and modify the transactions from there. This way, you can generate the refund and reconcile it again. 

You can clear the closing date to make necessary changes.

To do that:

1. Before you start, sign in to QuickBooks Online as a primary admin or company admin. Only admins can make these changes.
2. Go to Gear icon and then select Accounts and Settings.
3. Select the Advanced tab.
4. Select Edit in the Accounting section.
5. Change the closing date. Note: To change your password, just enter a new password and confirm it.
6. Select Save and then Done.

For more information about editing a closed books, please see this link: Learn how to change your closing date and password.

Once done, you can now undo the reconciliation and create a refund. After that, you can reconcile them and close the book again.

Here's a link that provides information on what are the best thing to do before closing a book in QuickBooks Online: Learn how to close your books and prevent changes to past transactions.

If there’s anything else I can help you with, post a comment below. I’ll be right here to assist further. Have a great day.

Without affecting the closed books/year, and going back by undoing reconciliations to save time, would there be a workaround for recording just the refund of $100 in the current year without having to go back to make any changes during closed year?

Here below is why:

1) Deleting bank deposit in the "Add funds to this deposit" window which client originally recorded recently on 9/3/21 and dated this transaction on 5/15/20 would just overstate the services income account already recorded by journal entry on 5/15/20. This deposit also showed only 1 line item received from (customer name), account (services income) and amount for $5100 instead of those 2 line items mentioned earlier that we’ll delete.

2) Since #1 above double counts the services income, we would just need to leave the journal entry that was reconciled in the prior year which was recorded as a debit to bank and credit to income services.

3) Also, the invoice #1234 for incorrect amount due for $5000 was matched against incorrect payment amount of $5000 during the closed period, which also didn't clear the bank. I believe this didn’t affect financial either during closed period, correct?  Therefore, isn't the journal entry sufficient and is also replacement of invoice #1234 which didn't clear due to incorrect invoice amount matched with incorrect payment? So bottom line, this journal entry would then remain and not necessarily need to delete?

4) Assuming the deposited check recorded by client should then be deleted, we now need to record the credit which customer overpaid by $100 (due to the $5100 customer check payment on 5/15/20 minus $5000 incorrect invoice amount) in the form of a refund receipt. When creating refund receipt, the Product/Service selected should also be "income services”, payment method (check), refund receipt date (10/5/21) or later date which client desires and amount of refund for $100?

Creating a refund receipt vs. credit memo is appropriate option?

5) Consult with client on #1 and #4 before taking further action?

Thanks for any further input regards to these details.