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A
allen25glenn
July 15, 2022
Solved

Journal Entry

  • July 15, 2022
  • 2 replies
  • 7 views

Hi , the previous bookkeeper of my client made an erroneous entry of Dr Customer Advance Cr Checking Acct dated Dec 2019 for a transaction not even existed. To clear the negative balance of Customer Advance, i deleted the journal entry. It resulted to no more negative Customer Advance. Is it appropriate to delete the journal entry than to reverse it?

Best answer by Rainflurry

I thought of that too. But the negative AR was applied the next year when service is rendered.  So that leaves Customer Advance being negative balance.


@allen25glenn 

 

OK, so now I think I see the issue.

 

The original entry (Dr customer advance, Cr bank account) needs to be reversed in the current period because, as you mentioned, it's an error.  Obviously, there is no payment made when receiving a customer advance.  That will zero out the customer advance balance and the two bank entries offset.

 

The reason the bank account is overstated in QB is that the payment received in QB was never deposited at the bank, correct?  So, doesn't the customer still owe your client the prepayment?  That should reconcile the bank account.

2 replies

R
Rea_M
Level 10
July 15, 2022

Hello there, @allen25glenn.

 

I'll help route you to the best support who can identify if deleting a journal entry is more appropriate than reversing it in QuickBooks Online (QBO), so you can keep your financial data accurate.

 

Journal entries are the last resort for entering transactions. You can reverse it if you need to update or correct its entries. Then, delete it if you've created the entry by mistake.

 

However, to choose the appropriate action, whether to delete or reverse a journal entry, I would encourage you to consult with your accountant. They can provide expert advice and direction tailored to your business needs.

 

In case you already have an accountant and you want to add them to your QBO account, here's how:

 

  1. Sign in to QuickBooks Online as a primary admin.
  2. Go to Settings or Gear ⚙ icon and select Manage users.
  3. Select the Accounting firms tab.
  4. Click Invite.
  5. Enter your accountant's info and select Save.

 

Now that your financial data is accurate, you may also want to visit one of our Help pages as your reference in managing your QuickBooks account and your business's growth and transactions using QBO: QuickBooks Help and Support. It includes QuickBooks Help articles, Community discussions, and video tutorials, to name a few.

 

If there's anything else you need, or you have other questions about managing transactions in QBO, I'm always ready to help. Take care, and I wish you continued success, @allen25glenn.

Rainflurry
Rainflurry
Level 11
July 15, 2022

@allen25glenn 

 

It is best to reverse it in the current period.  If you delete the entry, you are changing balances from prior closed periods that were reported on your financial statements and tax returns. 

A
allen25glennAuthor
July 15, 2022

I also tried that reversing on the current period but the Checking account resulted to a difference from quickbooks balance vs bank balance. How will I solve that?

Rainflurry
Rainflurry
Level 11
July 15, 2022

Yeah I need to reverse it in this current period now. But on the payment received part, the customer did pay the client with 2 checks. The client sent me a pdf copy of those, but when I asked about where did it deposited, he still have to look for it. I don't know how to say this to client. 


@allen25glenn 

 

If the customer paid your client, but your client cannot confirm that the payment was deposited into the business bank account, then just ask them where it was deposited to.  If your client deposited the check into their personal account, you can easily record it as an owner's draw (if a sole proprietorship) or a distribution (if a corporation) - Dr owner's draw/distribution, Cr bank account.  That should reconcile your bank balance.  It gets a little sticky if your client is a partnership or a corporation with more than one shareholder because distributions should be made in proportion to their ownership percentages.

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