Balancing AR Account in QBO

mwarby96 · ‎September 10, 2020

I am helping a friend clean up her QBO company file. She uses a point of sale system to record all of her sales. She does not enter invoices in QB. She records her monthly Accounts Receivable using journal entries each month. The end of year 2019 balance for her A/R account does not match the A/R report from her POS system. A $2,000 AR payment was received in 2019 (deposited into bank account), but not applied to A/R. The books have been closed for 2019 and taxes files. How do I now account for the payment without affecting the income in 2020? My first thought it to make a prior year adjustment JE and offset it against Retained Earnings. Would that be ok?

Anthony Accounting Center · ‎September 13, 2020

You have to choose to affect either 2019 or 2020. Since 2019 book was closed and tax return was filed, it is more simple to apply this payment in 2020. Are you on accrued or cash basis? If your book is accrued, remember tax return is cash basis. If you receive more payments in 2020, you pay more taxes in 2020.

For long run, you should have your friend to create invoices and/or sales receipts, not JEs, in QBO.

Hope it helps. Please let me know if any questions

Anthony

mwarby96 · ‎September 15, 2020

Thanks Anthony. QB is set up as accrual accounting. I plan on recording it in 2020. Since there is not an invoice what do I do?

mwarby96 · ‎September 15, 2020

Thanks for responding Anthony. QB is set up using accrual accounting. I plan on making the adjustment in 2020. Can you please explain what I should do?

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Balancing AR Account in QBO