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Establishing a new QBO file mid year. Entered current year income and expenses based on bank feed. Net income is throwing off opening equity balance. How to remedy?

 
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Best answer 07-12-2019

Accepted Solutions
QuickBooks Team

Re: Establishing a new QBO file mid year. Entered current year income and expenses based on bank ...

Welcome back, @Aramis,

 

I want to ensure your book balances are correct in QuickBooks Online.

 

Once you add your bank data into QuickBooks, it automatically updates the register balance which directly affects your financial reports. If you want to correct any discrepancies after the import, you'll need to review each transactions making sure it matches with the bank statements. If there are corrections to be made, I highly recommend contacting an accounting professional to help you with the correct way to remedy the discrepancy and guide you with what accounts to use.

 

You also have the option to edit the opening balance if you haven't created any transactions by creating a journal entry. Here's how:

 

  1. Click the Create icon (+).
  2. Pick Journal Entry.
  3. Key in the Journal date and fill out the Account field.
  4. Add the amount in either the Debit or Credit column. For assets and expense accounts, enter the opening balance amount in the Debit column. For liabilities, equity, and income accounts, enter the opening balance amount in the Credit column.
  5. Next, select the Opening Balance Equity account in the Account column
  6. Enter the opening balance amount in the opposite column than the one you used on the first line.
  7. Hit Save.

You can check out this article to know more about the process: How to enter a beginning balance for an existing account

 

Please update me once you've tried the steps. I want to make sure you're all set with the reconciliation process. I'll keep an eye out for your response. Have a nice day!

3 Comments
QuickBooks Team

Re: Establishing a new QBO file mid year. Entered current year income and expenses based on bank ...

Hi there, Aramis.

 

There might be missing transactions that are causing an incorrect net income or opening balance equity. You can run a couple of transaction reports to double-check if everything was recorded. Here's how:

 

  1. Go to the Reports menu.
  2. Look for Transaction List by Customer or Transaction List by Vendor report.
  3. Make sure the Report Period dates are correct to make sure all recorded transactions are shown in the report.

Although, you can create a journal entry to adjust your opening balance equity. We also recommend checking with your accountant just in case you're not sure what accounts to use in the correcting entry. Here's a support article for more details: Create A Journal Entry.

 

You can always add a reply below if you need anything else.

Frequent Explorer **

Re: Establishing a new QBO file mid year. Entered current year income and expenses based on bank ...

Hi @JenoP, thanks for your response. I think my problem was more related to inputting expenses prior to the date I established my opening balance sheet. I moved to Quickbooks online mid year, and set up my balance sheet with all the correct mid year balances. I then imported the entire 2019 year transactions to date from my banks and credit cards. I began by classifying the expense transactions as such, and naturally this affects my year-to-date net income, which closes to equity when the balance sheet report is ran. The expenses that were dated prior to the opening balance sheet date are affecting my net income for the year, which in turn is throwing off the correct equity balance I had established when I created my opening balance sheet. Is there a way to remove the effect of these prior expense transactions from the opening balance sheet? Is my only solution to restart and create my opening balance sheet as of 1/1/2019? Thanks again
QuickBooks Team

Re: Establishing a new QBO file mid year. Entered current year income and expenses based on bank ...

Welcome back, @Aramis,

 

I want to ensure your book balances are correct in QuickBooks Online.

 

Once you add your bank data into QuickBooks, it automatically updates the register balance which directly affects your financial reports. If you want to correct any discrepancies after the import, you'll need to review each transactions making sure it matches with the bank statements. If there are corrections to be made, I highly recommend contacting an accounting professional to help you with the correct way to remedy the discrepancy and guide you with what accounts to use.

 

You also have the option to edit the opening balance if you haven't created any transactions by creating a journal entry. Here's how:

 

  1. Click the Create icon (+).
  2. Pick Journal Entry.
  3. Key in the Journal date and fill out the Account field.
  4. Add the amount in either the Debit or Credit column. For assets and expense accounts, enter the opening balance amount in the Debit column. For liabilities, equity, and income accounts, enter the opening balance amount in the Credit column.
  5. Next, select the Opening Balance Equity account in the Account column
  6. Enter the opening balance amount in the opposite column than the one you used on the first line.
  7. Hit Save.

You can check out this article to know more about the process: How to enter a beginning balance for an existing account

 

Please update me once you've tried the steps. I want to make sure you're all set with the reconciliation process. I'll keep an eye out for your response. Have a nice day!