our company is accrual. But we do not use invoices. We record sales through journal entries. This is making my A/R negative on balance sheet. How do I fix this.

We greatly appreciate you participating in the Community forum and posting your concern, lorenaemer. I'd be happy to assist you in resolving your A/R negative on your balance sheet report.

It would be best to edit your journal entries (JEs) in QuickBooks Desktop as you have already journalized your transactions and chose not to generate invoices. To accomplish that:

Journal entries combining multiple transactions involving B/S accounts should separate the A/P and A/R portions. After that, move the A/R section to the journal entry's first line. The report will not include journal entries that are offset to an account for income or expenses, while the offsets to balance sheet accounts will keep showing up on the report.

You may want to learn how to reverse and delete a journal entry in QuickBooks Desktop. Check out this article: Create a journal entry in QuickBooks Desktop for Windows.

Get in touch with us if there is anything else you need help with any QuickBooks-related concerns. The Community is always here to help 24/7. Take care!

Thank you for your help. 

Will moving A/R to first line on JE fix the way it is showing as a negative on B/S? 

Will putting A/R on first line of JE fix how it's showing up as negative on my B/S?

Thank you,

Good afternoon, @lorenaemer. 

Thanks for chiming back in on this thread. Allow me to give you the answer to your question. 

Moving the A/R to the first line won't resolve how it shows negative on the B/S. It depends on how you entered the amount in the correct flow of the money and whether it is credited or debited using that account. 

The steps that my colleague provided above are what to do next if you encounter a negative on the B/S after you have already journalized your transactions but decided not to create invoices.

I strongly advise to consult with your accountant about how to fix the negative on the B/S. 

Keep us updated on how the conversation goes with your accountant. We're always here to have your back. Take care! 

@lorenaemer 

Can you post a screenshot of one of your journal entries (JEs) or at least a list of the debits and credit from a JE?  You're A/R is being driven negative because the journal entry is crediting (reducing) A/R.  That's an odd entry for recording sales because sales income should be the credit entry, not A/R.     

Please see screenshot. We do not use invoices. We have another program which does all that. It would be impossible for us to do that in QB.

Therefore we use a JE to record all the monthly transactions: sales, AR, prepayments, etc. This is making my AR negative. If I were to create invoices this would duplicate our sales which are already recorded in this JE. This is how we do it in Sage with no issues. THE JE is correct. the entries are correct. The only incorrect thing is that QB isn't intuitive to understand that AR can exist w/o invoices. 

Please help.

@lorenaemer 

Why does your JE have a credit (reduction) to A/R but no corresponding debit (increase) to A/R?  Is this an automated entry from a different system that you export into QB or is it created manually?  When an accrual-basis taxpayer invoices a customer for storage fees, the debit entry to A/R is offset by a corresponding credit entry to book income.  If there is no debit entry to A/R (as it appears from your screenshot) that is booked prior to the A/R credit, then it seems to me that this A/R credit should be reclassified as income.  Otherwise, how would the amount booked to the A/R credit ever have been booked as income?

Thank you for your help @Rainflurry.

I manually enter these from accounting reports I get from the storage system. (where invoices, payments, ledgers etc. are recorded).

Let me speak to the accountant and show her your comments and see what she says. 

I appreciate your help. 

I will hop back on once I get a reply from her: as I may need more help. :-).

The only thing I see as being an issue is that our revenue is already recorded (the first two lines of JE) so your idea may double the revenue. 

Let me try your idea and see what the accountant says and get back to you. 

Thanks

@lorenaemer 

Just a few additional thoughts:

The first two lines of your JE are your bank deposits, not your income, since you're on accrual basis.  Accrual basis taxpayers record income when the customer is invoiced, not when payment is received.  What's happening here is that your JE has sales recorded as credits (most of the credit entries from your screenshot) and your bank deposits as debits.  However, for any given month, your invoices issued aren't going to match the payments received, and the difference is getting booked to A/R.  So, based on your screenshot, you received $1,716.47 more in payments than you issued in invoices.  Some months A/R will be a debit entry (when you issue more invoices than payments received) and some months it will be a credit entry (when you receive more payments than you issue invoices).  That difference is the reduction or increase in A/R. 

The way you do the JE now, only the difference between invoices issued and payments received is getting booked to A/R.  It would be more accurate to book all invoices as a credit to income with the same amount as a debit to A/R.  Then, you would have a second entry that would credit A/R by the amount of the payments received.  That would give you an accurate amount of outstanding A/R, not just the difference. 

Just my $.02

@Rainflurry , This is a great answer. I really appreciate your help. Let me see how it works. 

Thank you,