Clean Up Old A/P

coloradoperkins · ‎August 11, 2024

Took over a company and trying to clean up their old A/P and the Pay Bills window. The actual A/P balance is showing only $8675 which is the most recent journal entry in 2023. But the Pay Bills window has a ton of old transactions showing besides that which have never been cancelled out. (See Photo). How can I get these cancelled out appropriately so they no longer show in the Pay Bills window? I will deal with the existing A/P $8675 balance separately. Please if you offset to another account, which account? Thanks!

Rainflurry · ‎August 11, 2024

@coloradoperkins

First, ignore the advice given by @AbegailS_ . That must be an AI-generated post. That advice could not be less helpful. I have no idea what "Creditors" are in QB Desktop. Also, it would do nothing but reclass your A/P balance to a bank clearing account which makes no sense.

To answer your question, if the $8,675 A/P balance was paid via check instead of using bill payments, you can just change the account listed on the checks to A/P and then apply them to the bills.

If January is closed, then you will need to reverse the January entries in the current period. What account(s) were assigned to the checks? Whatever they are, they are overstated because the asset/expense accounts listed on the bills from 2023 have now most likely been duplicated by issuing the January checks. You want to make journal entries that credit the account(s) listed on the January checks and debit A/P. Then, apply the credits created by the journal entries to the outstanding A/P balance. This assumes you're on accrual basis.

View solution in original post

coloradoperkins · ‎August 11, 2024

I solved the old amounts by making all the vendors match and then applying as credits. Problem now is the current $8675 A/P balance from 2023 was paid via checks in Jan 2024 and not paid via bill payments. How to resolve?

AbegailS_ · ‎August 11, 2024

Hello there, @Colorado.

Thank you for providing details on your efforts to clean up the old Accounts Payable (A/P) and Pay Bills window in QuickBooks Desktop. It's great to hear that you were able to address the old amounts by matching vendors and applying credits.

Regarding the current $8,675 A/P balance from 2023 that was paid via checks in January 2024 instead of bill payments, you can resolve this by following these steps:

First, we'll have to create a clearing account this account will be used to offset the old A/P balances. To do this:

Click Lists, then go to Chart of Accounts.
Tick Account, then choose New.
Choose Bank, then click Continue.
Enter a desired name (example: clearing account).
Select Save & Close.

Next, create a journal entry for each old bill that needs to be cleared. Here's how:

Click Accountant, then go to Make General Journal Entries.
In the Account field, choose Creditors.
Enter the amount in the Debit field, then choose the supplier in the Name field.
In the next row, choose the clearing account you've created in the Account field.
Enter the amount in the Credit field, then choose the supplier in the Name field.
Click Save & Close.

Then, here's how to apply the entry to the existing balance to reconcile the payment:

Tick Vendors/Suppliers, then go to Vendor Center/Supplier Center.
Select the supplier, then look for the bill.
Open the bill, then click Pay Bill.
Click Set Credits, then you'll find the journal entry in the Credits tab.
Choose it, then click Done.
Click Pay Selected Bills.

It's advisable to consult with your accountant to ensure that this method aligns with your overall accounting practices and to verify that the clearing account is set up correctly.

Furthermore, paying bills is part of your usual accounts payable workflow in QuickBooks Desktop (QBDT). For more information on vendor-related transactions and workflows, you can refer to this article: Account Payable Workflow.

I'm always here anytime you need additional help concerning the A/P account. The Community will be on a lookout on your response.

Rainflurry · ‎August 11, 2024

@coloradoperkins

First, ignore the advice given by @AbegailS_ . That must be an AI-generated post. That advice could not be less helpful. I have no idea what "Creditors" are in QB Desktop. Also, it would do nothing but reclass your A/P balance to a bank clearing account which makes no sense.

To answer your question, if the $8,675 A/P balance was paid via check instead of using bill payments, you can just change the account listed on the checks to A/P and then apply them to the bills.

If January is closed, then you will need to reverse the January entries in the current period. What account(s) were assigned to the checks? Whatever they are, they are overstated because the asset/expense accounts listed on the bills from 2023 have now most likely been duplicated by issuing the January checks. You want to make journal entries that credit the account(s) listed on the January checks and debit A/P. Then, apply the credits created by the journal entries to the outstanding A/P balance. This assumes you're on accrual basis.

coloradoperkins · ‎August 12, 2024

Yes, this, thank you!

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