End of year P&L not reflecting customer credit

BaylightContracting · ‎February 05, 2025

Hi,

Accounting end of year question.

Was sending my Profit and Loss (2024) to my accountant and saw it was showing Net Operating Income of $24,000 or some change (after business expenses, it is $3,000 or so in the negative).

But I am still in the middle of a job where I issued an invoice for $50,000 and the customer still has $24,168.18 of credit and the job is not complete.

Here is my setup:

The job is called '508' and I had issued a $50,000 invoice and customer has paid it, into Accounts Receivable. I make all payments into sub-accounts accordingly (Plumbing, Electric, Framing, HVAC, etc.).

Accountant said I have to do this:

Move the $24,168.18 to Accounts Payable ( Prepay 508 on account) from revenue.

Dr Revenue 508 $24,168.18

Cr Accounts Payable- 508 $24,168.18

But how do I do this? Not sure what does he mean?

Thanks,

Baylight Contracting

ArielI · ‎February 05, 2025

I appreciate you for bringing up this concern in the Community, @BaylightContracting. It looks like your accountant wants you to record a Journal Entry. Let me guide you through this process, to ensure everything is correctly documented.

Here's how:

Click the + New.
Select Journal entry.
On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
On the next line, select the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
Enter a brief but descriptive memo to explain the reason for the journal entry,
Finally, click Save and new or Save and close.

For more detailed steps, refer to this article: Create journal entries in QuickBooks Online.

Moreover, I'm delighted to inform you that our QuickBooks Live Expert Assisted team is always available to assist you with your journal entries. With their extensive expertise and unwavering commitment to customers like you, they are ready to offer invaluable insights and best practices.

Additionally, you can visit this article to learn how to create and review adjusting journal entries: Make adjusting journal entries in QuickBooks Online Accountant.

Let us know if you have further questions about managing journal entries in QBO. We'll be right here to help you anytime.

View solution in original post

ArielI · ‎February 05, 2025

I appreciate you for bringing up this concern in the Community, @BaylightContracting. It looks like your accountant wants you to record a Journal Entry. Let me guide you through this process, to ensure everything is correctly documented.

Here's how:

Click the + New.
Select Journal entry.
On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
On the next line, select the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
Enter a brief but descriptive memo to explain the reason for the journal entry,
Finally, click Save and new or Save and close.

For more detailed steps, refer to this article: Create journal entries in QuickBooks Online.

Moreover, I'm delighted to inform you that our QuickBooks Live Expert Assisted team is always available to assist you with your journal entries. With their extensive expertise and unwavering commitment to customers like you, they are ready to offer invaluable insights and best practices.

Additionally, you can visit this article to learn how to create and review adjusting journal entries: Make adjusting journal entries in QuickBooks Online Accountant.

Let us know if you have further questions about managing journal entries in QBO. We'll be right here to help you anytime.

BaylightContracting · ‎February 05, 2025

Ariell, thank you so much!

I debited the 508 Account and then credited Accounts Payable, but I had to create a Vendor named "Accounts Payable 508" because it would not let me credit the customer.

I am not sure if it is correct, I will go over with accountant but it did balance out my end of year P&L correctly. If you have any other insight, I will look at it.

FishingForAnswers · ‎February 05, 2025

@BaylightContracting I don't have much to add to this, but the reason you can't assign Accounts Payable to the customer is because they're a customer.

Accounts Receivable is an account used to track what other people owe you; it is typically associated with customers.

Accounts Payable is an account used to track what you owe other people; it is typically associated with vendors.

Hence, you would not normally, if ever, use Accounts Payable to track what your customers owe you.

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End of year P&L not reflecting customer credit