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Hello,
We receive pledges in the Fall of 2020 for donations that will be applied to our 2021 budget. We receive most of the actual payments for these pledges in 2020 as well. I entered the pledges as invoices, due Jan 1, 2021. I matched the invoices to payments we received in 2020, and this creates a negative accounts receivable for our end of year report.
Internally, the Board is fine with this as we understand the reason this is showing up. My question is: is it ok to present this on our external financial documents or is negative accounts receivable a no no? And if so, what would be another way to track this in QB and present it on reports?
Thanks.
Solved! Go to Solution.
I've got your back, @Volunteer Treasurer.
Negative Accounts Receivable is a posting account for unapplied customer credit. You'll want to move the negative A/R to another current liability account other than A/P. Then, you'll need to reverse your actions once you have an actual sale to the specific customer. For further assistance and to ensure you'll account the transactions accurately, I recommend consulting your accountant. If you don't have one, you can use our Find an Accountant tool to look for a Pro-Advisor near your location.
If you run your Balance Sheet report on a cash basis. The negative A/R will drop down to Retained Earnings and remove the negative A/R.
Check it here for additional details: A/R or A/P balances.
Also, to get a list of all payments and invoices for each of your customers, you may pull up the Invoices and Received Payments Report. Then, customize it so it will only show the info you need.
You can always get back here if you have other QuickBooks related concerns. I'll be here to help you. Stay safe.
Hi there, Volunteer Treasurer.
How you present your financial report depends on what Accounting method you are using. It could either be Cash or Accrual.
If you're using Accrual basis:
If you're using Cash basis:
For more details about this, take a look at this link: Choose between cash and accrual accounting methods in reports.
To know how to fix an Accounts Receivable balance on a cash basis Balance Sheet, see this article: Resolve A/R or A/P balances on a cash basis Balance Sheet.
If there's anything else that you want us to help with, let us know so we can check that and assist you.
Hi Miriam,
We recently switched from Cash to Accrual, and we're using an accrual basis balance sheet. My question is if I'm accounting for these invoices correctly, given that we're using accrual accounting.
Another way to ask this would be: is it acceptable to have negative accounts receivable? Or do I need to move these pre-paid pledges into a liability account?
I've got your back, @Volunteer Treasurer.
Negative Accounts Receivable is a posting account for unapplied customer credit. You'll want to move the negative A/R to another current liability account other than A/P. Then, you'll need to reverse your actions once you have an actual sale to the specific customer. For further assistance and to ensure you'll account the transactions accurately, I recommend consulting your accountant. If you don't have one, you can use our Find an Accountant tool to look for a Pro-Advisor near your location.
If you run your Balance Sheet report on a cash basis. The negative A/R will drop down to Retained Earnings and remove the negative A/R.
Check it here for additional details: A/R or A/P balances.
Also, to get a list of all payments and invoices for each of your customers, you may pull up the Invoices and Received Payments Report. Then, customize it so it will only show the info you need.
You can always get back here if you have other QuickBooks related concerns. I'll be here to help you. Stay safe.
That's helpful. Thanks!
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