Question

I need help in fixing unapplied payments expense

15 replies
315 views

I imported data from QB desktop to QB advanced online. I am having problems trying to figure out how to fix unapplied payments, even after searching for answers. Since we pay our bills as soon as we get them, I have been avoiding using bills. There are some cases where I would debit the expense and credit accounts payable for some vendors. When making the payment the cash account would get credited and the debit would be to the corresponding payable account. Evidently this causes problems. From my searches it seems like I need to create a bill, what concerning me is if the expense account will be charged twice, once when I made the original entry to accounts payable and again when I create the bill. Or do I expense the unapplied cash payment account.

QuickBooks Online

B

Briggs Bookkeeping 1

Hi,

Yes, it will create an additional expense if you create a bill for the same expense you created with a journal entry. How did you create the original entries when you said you debited the expense and credit accounts payable? Did you use a journal entry?

If you used a journal entry then yes you probably see the expense and unapplied payment when you run a cash basis profit & loss statement.

Try running the general ledger report and look at the accounts payable account. If you see any unpaid a/p then you will probably need to use a journal entry to clear off since you did not enter these expenses as bills.

You should see the accounts payable zero out when you created the journal entry to debit the expense and credit a/p and then you debited the a/p and credited cash.

Going forward, create bills instead of using journal entries so you can view outstanding bills in your A/P Aging Summary report. When you pay the bill then use the bill payment feature.

M

MirriamM

QuickBooks Team

I’m thrilled to see you taking this exciting step of migrating to QuickBooks Online (QBO) from QuickBooks Desktop (QBDT), Gary. We know change can be overwhelming, but rest assured, we’re here to make the transition as seamless as possible for you.

As you move from QBDT to QBO, it's important to note that not all data gets converted, which could cause certain transactions to show unapplied payments. To understand what data doesn’t migrate, take a look at this article: Learn how features and data move from QuickBooks Desktop to QuickBooks Online.

To resolve the issue about the unapplied payments, I recommend opening the Profit and Loss report and look for the Unapplied Cash Bill Payment Expense section.

From there, select the total amount and take note of the vendor and the amount associated with each bill payment in the list.

Once done, create bills for the unapplied payments. Here's how:

In the left menu, click the + New button.
Choose Bill.
Fill out the details with the same vendor, amount, and date as the bill payment.
Select Save and close.

After that, choose Pay Bills from the + New button. If you see bills matching the bill payments in the list, select the checkboxes next to them, then Save.

When done, run your Profit and Loss report. The Unapplied Cash Bill Payment Expense account should now be removed.

Regarding your concern about double-charging the expense account, creating the bill will not charge the expense account twice. The expense was already recorded when you initially debited the expense account and credited accounts payable. Creating the bill will simply match the payment to the bill, clearing the unapplied payment without duplicating the expense.

Furthermore, we have a QuickBooks Live Expert Assisted service that assists users with their downloaded transactions, online banking challenges, and various accounting tasks. Our experts offer insights on best bookkeeping practices and using QuickBooks.

After your move to QuickBooks Online, you can find helpful resources here: Learn what to do after you move from QuickBooks Desktop to QuickBooks Online.

Should you require further assistance at any point, whether during this transition or in the future, I’m always here to help. You can connect with us by leaving a comment below.

J

jsedigo2

Maybe it's a different discussion but this still involves unapplied payments expense.

What do I need to do if the unapplied payments expense is caused by a prepayment?

Scenario: We prepay our vendors to get discounts. Once they bill us, we draw from that prepayment. QBO recommends we use "Accounts Payable" when we prepay vendors so we can easily apply that prepayment to the vendor bills. This creates an abnormal A/P balance at month-end but we adjust that through a journal entry:

Dr Prepaid Expense

Cr Accounts Payable

With that, our A/P balance is corrected and we recognized the prepaid expense when we close our books monthly.

The problem arise when we run cash P&L for tax purposes. All the bills that were paid using the prepayment appear under the Unapplied Cash Bill Payment Expense. How do I fix that?

Z

ZackE_

Moderator

Thanks for joining this thread, jsedigo2.

When you run a Profit and Loss report in QuickBooks (using the cash method), an account called Unapplied Cash Bill Payment Expense shows.

This account will show up when:

You entered bill payments without matching them to bills.
A bill payment for a vendor is recorded before entering the bills.

Here's what to do if you see unapplied cash bill payment expense on your profile and loss report:

Open the Profit and Loss report and look for a section titled Unapplied
Cash Bill Payment Expense.
Choose the total amount. Take note your vendor and amount for each bill payment in the list.
Click + Create, then Pay bills.
If you see bills matching the bill payments in your list, tick the checkboxes next to them, then hit Save.
In the event you don’t see a matching bill for one of your bill payments, use the + Create option to create it.
Repeat the steps for any bill payments left on the list.

When you're finished, try running your Profit and Loss report again. The Unapplied Cash Bill Payment Expense account should be removed from your report.

I've also included a detailed bookkeeping resource which may come in handy moving forward: Debit vs. credit in accounting - Guide, examples, & best practices

Please feel welcome to send a reply if there's any additional questions. Have a wonderful Thursday!

Rainflurry

Level 11

@garystepic

"Since we pay our bills as soon as we get them, I have been avoiding using bills."

In the future, you can use an Expense (New > Expense) transaction instead of a journal entry or bill. The Expense transaction in QBO serves the purpose of recording an expense and paying it at the same time. QB Desktop doesn't have the Expense transaction. Also, journal entries are a last resort type of entry because they don't show under the vendor account (unless the journal entry contains an A/P line) like they did in QB Desktop.

"There are some cases where I would debit the expense and credit accounts payable for some vendors. When making the payment the cash account would get credited and the debit would be to the corresponding payable account. Evidently this causes problems."

I don't think that's what's causing the issue. Journal entries aren't recognized by QB to post to "Unapplied Cash Bill Payment Expense" (UCBPE). UCBPE should only show when you run a cash basis P&L and you have entries to A/P that use standard QBO forms (Bill Payments, Deposits, etc.) and the date on those entries precede the bill in which they should be applied/credited. QB Desktop doesn't have UCBPE so you may have had these entries in QB Desktop, you just didn't see them because QB Desktop ignores those entries on the P&L. IMO, this is an improvement over QB Desktop.

A this point, you should be able to click on the UCBPE balance on your P&L and see what transactions are hitting that account. You can then go through and change the dates on the payments/deposits/checks, etc. so they are dated the same as or later than the bills in which they apply.

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