General Journal entry Accounts Receivable into Retained Earnings

I'm glad seeing such dedication to accuracy in action, @DugH. It showcases your commitment to excellence in your business practices. I’m here to help guide you through this situation and get things back in order.

You can modify the original journal entry by debiting the Accounts Receivable account and crediting another appropriate account that accurately reflects the nature of the transaction.

I recommend reaching out to your accountant to determine the best account to use for this adjustment. They offer personalized insights that cater specifically to your unique situation, all while ensuring you stay fully compliant with accounting standards.

Furthermore, It would be best to communicate with the person who made the original journal entry. This discussion will clarify the intent behind the entry and ensure everyone is aligned going forward.

Additionally, I've compiled these valuable resources to assist you in importing journal entries from your accountant into the software and customizing your Accounts Receivable reports to ensure you maximize your QuickBooks experience.

• Import journal entries from your accountant
• Run and customize reports in QBDT

I appreciate your commitment to getting things right, @DugH. Should any further questions arise or if you need assistance with other QuickBooks tasks, please connect with us through this channel. We’re committed to supporting your financial management.

Check the Audit trail report to know who made it, but you can just delete it anyway if it's a false entry.

@DugH 

As I'm sure you're aware, you can't just delete it since the entry is from a closed period.  Is your company on cash or accrual basis for tax purposes?

We are on a cash basis. As you may have noticed from the image I posted, the transaction was done in 2021. (Obviously a closed period) No one knows why this was done other than "The tax preparer told them to do this". (I started working here at the end of 2023) If this can be fixed it would be great. Otherwise, the A/R will remain overstated from now on.... Not acceptable IMO.

@DugH 

Agreed, not acceptable.  Presumably, this entry was made to reconcile net income to tax basis. 

A few questions if you have time:

1) Was the A/R debit on the journal entry (JE) assigned to a bogus customer?  

2) What's the date of the JE you posted?  

3) Does your business accept deposits/prepayments for service (deferred revenue)?  I'm trying to understand why the JE increases A/R.  Prepayments that posted to A/R (payment receipts) would necessitate an increase in A/R to reconcile net income to tax but that would have been easily accomplished by simply running the 12-31-21 P&L on cash basis where QB would remove A/R assuming all entries to A/R were made with invoices and payment receipts.  QB cannot ignore JEs posted to A/R so maybe that's part of it.     

4) If you run a balance sheet and A/R aging report dated one day prior to the JE, does that show any indication of where the 95,652 came from?  Any negative A/R balances?