Opening balances for a prior year need to be corrected.

JanJaw · ‎February 12, 2019

The dilemma: In February of 2018 I set up Quickbooks in order to start keeping books on an already established business. The accountant who previously kept the books was vague in providing past financials and other necessary data. It was to be coming, but it never did. I had opening bank account balances but not equity or AR or AP data to start with. Things were rolling so I had to start doing business. I entered vendor and customer data as it came along. Now it's 2019 and I submitted our financials to this same accountant to file our taxes, and she said your balance sheet isn't right because you didn't enter this information...(the financials that I needed from the beginning). She provided in the email in 2019. This involves AP of $7,000+. I don't know anything about the vendors or the transactions. Also there are equity accounts that I think I can deal with but would listen to advice.

The Question: How do I enter an opening AP balance then write it off, as I think I've already entered and satisfied any vendors we owe money to.

There's also an opening balance of a negative retained earnings to deal with.

Pete_Mc · ‎February 14, 2019

...The accountant who previously kept the books was vague in providing past financials and other necessary data...

That sounds like a call from your lawyer would be appropriate.

For the Accounts Payable, how many invoices are you talking about? Are you just trying to get those first couple of days or weeks where there were outstanding invoices when you set up QBs or are you talking about getting a record of everything prior put in to QBs for a historical record?

If there are just a few invoices, might it easier to just enter then and also enter the corresponding payments? You will need to adjust your Opening Balance in the Checking Acct to make sure you're still in Balance. So be sure to keep track of the Ending Balance before you start anything.

Also, be sure to BACK UP before you start.

View solution in original post

qbteachmt · ‎February 14, 2019

For a Cash Basis entity, this doesn't really matter: "This involves AP of $7,000+."

When you Pay is when the expense is considered to occur. You never needed Opening Balances. Or, you enter the unpaid bills, but in your case, you already entered the Purchased directly, so these entries would need to be changed to bill payments.

You need a different accountant. Stop using a person that isn't taking care of You, their paying customer, properly.

View solution in original post

Pete_Mc · ‎February 14, 2019

...The accountant who previously kept the books was vague in providing past financials and other necessary data...

That sounds like a call from your lawyer would be appropriate.

For the Accounts Payable, how many invoices are you talking about? Are you just trying to get those first couple of days or weeks where there were outstanding invoices when you set up QBs or are you talking about getting a record of everything prior put in to QBs for a historical record?

If there are just a few invoices, might it easier to just enter then and also enter the corresponding payments? You will need to adjust your Opening Balance in the Checking Acct to make sure you're still in Balance. So be sure to keep track of the Ending Balance before you start anything.

Also, be sure to BACK UP before you start.

JanJaw · ‎February 14, 2019

Thank you for your reply. I have since figured out how to adjust these opening balances this late in the game by viewing a few QB YouTube videos. Everything looks good now, but I still feel mystified by the rough transition into this role. I felt I was supposed to have access to this information from the beginning, and I also know there are ways to convert files from one system to a new QB setup that would have helped as well.

AldrinS · ‎February 14, 2019

H there, JanJaw.

I'm happy to know that you were able to figure this out and got everything in order thanks to PeteMc's awesome response and your effort in viewing those QuickBooks Youtube videos.

The Community is full of experts possessing knowledge in all facets of QuickBooks, so please reach out to us here if there's anything you need. We're always happy to help you along your road to victory. Wishing you all the best!

Pete_Mc · ‎February 14, 2019

Do you have a prior version of the company QB Data file? (e.g. Your Company Name.QBW)

If so, then yes, you could have just upgraded that file and continued on. But assuming you have too many new entries you may not want to do that now.

But you can still use the file as a historical reference. Be sure to make a Copy and Rename the the copy to something like Your Company Name - Old.QBW. Then move it to a Sub Folder where your current data file is located. Open QBs but click on Cancel when the Login screen comes up.

When the No Company Open window come up, click on Open or restore an existing company and brows to your "old" company file. Double click on it. It may need to upgrade to the current version of QBs you're using (which is why we made a copy), but once it opens, you'll have all your old records.

qbteachmt · ‎February 14, 2019

For a Cash Basis entity, this doesn't really matter: "This involves AP of $7,000+."

When you Pay is when the expense is considered to occur. You never needed Opening Balances. Or, you enter the unpaid bills, but in your case, you already entered the Purchased directly, so these entries would need to be changed to bill payments.

You need a different accountant. Stop using a person that isn't taking care of You, their paying customer, properly.

Pete_Mc · ‎February 14, 2019

Yea, but he started using the current QB file after the business had been running for a while. So there was already money in the bank.

And if he does go enter the old expenses and enter the corresponding (real) payment in checking, it's going to mess up his current ending balance.

Is there a better way to show the the expense and payment than entering it in AP and the payment in checking as (in theory) it was done back when the original payment was made?

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Opening balances for a prior year need to be corrected.