Why is a Service Item used on Invoice Posting to an Unearned Revenues Account

AWBEL · ‎October 22, 2020

We have an Item under Products and Services set up as a Service. That item uses a Revenues account as the "Income Account" and uses an Expense account as the "Expense Account". However, when that Item was applied to an invoice, the transaction posted against Accounts Receivable and Unearned Revenues. How is that possible and how do you fix it?

To illustrate further, the resulting journal entry looks like the following:

Dr. Accounts Receivable $11,000

Cr. Unearned Revenues $11,000

How is that possible if I used a Revenue account as the "Income Account" under the service item's setup?

AWBEL · ‎October 24, 2020

I found the answering through working with the QuickBooks online chat support. The reason why the invoice was using the Unearned Revenues account is because at some point the service item that was used on the invoice has that account mapped to it's "Income account" under that service items setup. Then, at some point after that invoice was created someone must have changed the mapping for the service item, but did not have it update existing/old transactions with the new mapping. The solution was to update the invoice and save it.

View solution in original post

RCV · ‎October 22, 2020

Let's investigate together what's causing the service item posting to an incorrect account, AWBEL.

I appreciate you for checking the item on the Products and Services page. This helps us verify the item uses the right account under the Income and Expense account fields. In this case, let's try creating a sample invoice using the same details. Then, try running a transaction journal of the invoice to see if the correct account is posted.

If it works, we can delete the invoices (including the sample one). Just follow the steps and details in the Void or delete transactions in the QuickBooks Online article. Then, create the invoice transaction again.

If the same result when checking the Transaction Journal of the invoice, we can try creating a new service item with the same posting account. Then, create an invoice and run the transaction journal. If it works, we can merge the two products or services to remove one of them from the Products and Services List. Here's how:

Go to the Gear icon on the top menu.
Select Products and Services.
Find the product or service that you want to merge.
In the Action column, select Edit.
In the Name field, enter the product or service you want to merge it with.
Press Save and Close, then select Yes to confirm the merge.

Feel free to visit our Sales and customers page for more insights about managing your company's income and customers.

I'd like to know how you get on after trying the steps, as I want to ensure this is resolved for you. Feel free to reply to this post and I'll get back to you, Take care always.

AWBEL · ‎October 23, 2020

Thank you for your response, but I don't understand your response at all? Why are you telling me to merge items? My concern had nothing to do with merging.

MariaSoledadG · ‎October 23, 2020

I'm here to make sure that your service item posts to the correct account, AWBEL.

You don't have to merge your items. However, as mentioned by @RCV, you can delete and recreate the invoice. Then, run the Transaction Journal to see if it's already posting to the correct account.

However, if it's still posting to the incorrect one, I recommend contacting our support team to help you check this further. They have the tools to pull up your account in a secure environment.

Here's how to reach them:

Sign in to your QuickBooks Online company.
Go to Help (?).
Select Contact Us.
Enter your concern, then select Let's talk.
Choose a way to connect with us:
- Start a chat with a support expert.
- Get a callback from the next available expert.

You'll also want to reach out to your accountant for other ways on how to do it.

In QuickBooks, there are different kinds of reports. You run reports to track your business information.

Please touch base with us if you have further questions. I'll be right here to help you.

AWBEL · ‎October 24, 2020

I found the answering through working with the QuickBooks online chat support. The reason why the invoice was using the Unearned Revenues account is because at some point the service item that was used on the invoice has that account mapped to it's "Income account" under that service items setup. Then, at some point after that invoice was created someone must have changed the mapping for the service item, but did not have it update existing/old transactions with the new mapping. The solution was to update the invoice and save it.

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Why is a Service Item used on Invoice Posting to an Unearned Revenues Account