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Level 2

Classes and Journal Entries

Hello, 

I will attempt to describe the issue I'm having with classes and journal entries. If there is already a conversation thread concerning this, please direct me there. I have searched for answers on the forum but may have missed something.

 

The issue:

We have multiple locations for our service/care-based business in one company data file and track expenses and revenue for each location by classes. There's individual checking accounts for each location and payments are often made from one checking account and expensed to multiple locations. Usually, the forms (checks, bills, billpay, etc.) are used but, occasionally, adjusting entries are necessary at the end of a period to true things up bit and it's not worth the time involved to correct each transaction. Basically, I have found that using journal entries with multiple classes to reallocate these expenses causes unbalanced classes on the balance sheet. This shows up at the bottom of the balance sheet under the Total Liabilities and Equity. I have talked with a QB tech to rule out any settings I may have missed and we concluded that QB does not recognize the journal entry as a transaction in light of the classes and since QB works primarily from forms-based transactions.

 

The question:

Has anyone found a workaround for unbalanced classes caused by journal entries involving multiple classes in a single entry?

 

Any help is appreciated!

7 Comments
QuickBooks Team

Classes and Journal Entries

Hello there, @hearthstonebkg.

 

I appreciate the details you've provided about your classes and journal entries concern. Allow me to steps in for a moment and share some insights about unbalanced classes.

 

The balance sheet in total (across all classes) follows the "Assets = Liabilities + Equity" equation and should always equal out. However, it's possible that the balance sheet doesn't balance for an individual class because transactions have to be entered in a specific way for every class to balance, which the program lets you know when you first open the report. When this happens, the report shows "Unbalanced Classes."

 

Most likely you've created the journal entries that change only one side of the balance sheet for a specific class. To resolve your concern, you must enter the transaction with debits for a specific class equal to credits for that same class. For the created journal entries, open them and manually update the information.

 

That should keep you going today, @hearthstonebkg.

 

I'm open to any additional questions about classes and journal entries. Just drop a comment below and I'll get back to you. Have a wonderful day.

 

Level 2

Classes and Journal Entries

Thank you for your response. I appreciate the time you took and the insight you shared. 

 

However, I can't just edit the journal entries to make the classes balance because I created them in order to reclass certain amounts to another class. 

 

Although your answer didn't provide a workable solution for me, your answer did help me understand my issue better and inspired a solution, based on your comments concerning the balance sheet needing to balance for individual classes. I have created an equity account called "Suspense" to record entries to rebalance the classes at the end of a period. It balances to zero in the total column and will be rolled into retained earnings at the end of the year. For the time being, this is sufficient for our purposes. I am certainly open to ideas if someone has anything else to add.

 

Thanks,

Sara

QuickBooks Team

Classes and Journal Entries

Hello there, @hearthstonebkg.

 

I appreciate you getting back to us and providing more insights about your concern today. Allow me to share some more details about the unbalanced classes.

 

If the Balance Sheet by Class report is not balanced, it's usually caused by one or more entries without a class. Normally it's the Bank and AP accounts because QuickBooks doesn't assign the class to checks and bills.

 

However, the only way to resolve your concern is to edit your journal entry. Since QuickBooks uses the double entry for every debit there is a corresponding credit. If you use the journal entry to transfer amount from one class to another you must include the other side of the transaction.

 

Let me give you an example. A journal for Class 1 on a check is:


Credit Bank - 100
Debit Expense account - 100

 

If you want to move the expense to Class 2, your journal entry should be the reverse for Class 1 and then an entry for Class 2. Here's how it look:


Debit Bank - 100 / Class 1
Credit Expense account - 100 / Class 1
Credit Bank - 100 / Class 2
Debit Expense account - 100 / Class 2

 

This way, it could help balance the classes.

 

That's it! Keep me posted if there's anything else you need or you have follow up questions. I'm still here to help you more.

Level 1

Classes and Journal Entries

Hi! I'm new to the Community. I am trying to clean up someone's books. For years they didn't use classes. Now that they are using classes, there are accounts on the balance sheet that are unclassed. I have been able to do journal entries to move balances from unclassified to the difference classes. However, when I print trial balances by class, the amounts for each class are off by the adjusting entries. The trial balance for all classes works. They just don't work for the individual classes. Any insight? Thank you!

Moderator

Classes and Journal Entries

Welcome to the Community, mduss.

 

You'll have to manually open each transaction and assign a class to allocate them correctly in QuickBooks Desktop

 

In this case, I recommend deleting the journal entry or reaching out to an accountant for further help in reclassifying the unclassified transactions by batch.

 

Though, you can refer to these steps to assign a class on each transaction:

  1. Open the Balance Sheet by Class report and double-click on the amount in the Unclassified column.
  2. On the Transactions by Account report, double-click on each transaction that make up the unclassified amount.
  3. Assign a class and click on Save & Close once done.

The following article will provide further information: Why does my Balance Sheet by Class report have unclassified amounts?.

 

To know more about class tracking in QuickBooks Desktop, you can check out these articles:

Let me know if there's anything else you need. I'll be here to keep helping. Wishing you the best.

Level 1

Classes and Journal Entries

Hi JaneD. Thank you for your response. Unfortunately, the unclassed entries go back 4 years. It's not practical to manually open each entry and assign it a class. That would be a Herculean task. 

QuickBooks Team

Classes and Journal Entries

I appreciate you getting back to us, @mduss.

 

I understand it requires a great effort to open each entry and assign a class. As mentioned by my colleague JaneD, you can seek help with your accountant to help you reclassify the unclassified transactions all at once.

 

Your accountant has the tool to assign classes to the unclassified transactions by batch. But if you're the accountant itself, you can read this article for more guidance: Accountant Tools: Reclassify your Client’s Transactions.

 

In case you need tips and related articles in the future, visit our QuickBooks Community help website for reference: QBDT Self-help.  

 

Please feel free to leave a comment below if you have any other questions. The Community team and I are always here to help.

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