Unapplied Cash Payment Income, how to clean payments received before invoices

A pleasant day, Vanna,

I'm here to help clean the Unapplied Cash Payment Income part on your Profit and Loss Account (P&L).

This account is created by QuickBooks for proper tax reporting. And, you'll see it on your P&L using the cash method. The following information shown below are the reasons why you're seeing this entry:

• A customer prepaid you and you recorded the payment before creating the sales form (invoice or sales receipt).
• You entered payments without matching them to sales forms.

You'll want to apply the payment you've recorded to the invoice. Or match it with the deposit on your bank feeds. Doing this will remove the transaction on the Unapplied Cash Payment Income account.

To do so, you'll first need to open the payment and change the posting account to Accounts Receivable. It will help link the entry to the open invoice.

After that, you can follow the solution outlined below:

Step 1: Run the Open Invoices report.

1. Go to Reports.
2. In the Find report by name field, enter Open Invoices.
3. Set the report period, then select Run report.
4. In the Transaction Type column, locate a transaction listed as a Payment.

If that Payment transaction matches an open invoice, go to Step 2. If you don’t see a matching open invoice, go directly to Step 3.

Step 2: If the Payment transaction matches an open invoice.

1. Select the Payment date to open.
2. Under Outstanding Transactions, check the open invoice.
3. Select Save and close.

Step 3: If the Payment transaction doesn’t match an open invoice, create the transaction.

1. Click + New.
2. Under Customers, select Invoice.
3. Fill out the form with the same customer, amount, and date as the payment.
4. Select Save and Close.
5. Go back to the Open Invoices report.
6. Find the unapplied payment, then select the date to open.
7. Under Outstanding Transactions, check the open invoice.
8. Click Save and Close.
9. Check your Open invoices report to see if there are any more transactions listed as a Payment. If there are, repeat step 2 for each one.

Once done, run again the Profit and Loss report. You should no longer see the Unapplied cash payment income. 

For more details, check out the What's Unapplied Cash Payment? link. It will explain why you're seeing the account.

Keep me posted if you need additional information. I'm always right here to help.

Thank you 

Hi, Vanna. 

You're very welcome, and if you need anything else, we're here for you. 

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