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M
Majella
January 9, 2024
Question

How do you correct a negative Accounts Receivable because of an Unapplied Cash Payment of Previous Years due to deleted invoice?

  • January 9, 2024
  • 1 reply
  • 0 views

There is a negative Accounts Receivable in my client's QuickBooks worth $2,500. I discovered this was due to an unapplied payment for an invoice incorrectly deleted in 2021. This resulted in a negative Accounts Receivable and a negative open balance in that customer's account. I am closing 2023 books and don't want to affect 2021 and 2022. I have searched the net and found no answer. I cannot create an invoice for 2021 because it will affect the 2021 and 2022 statements. What is the best way to correct this? 

1 reply

J
JanbonN
January 9, 2024

Hello there, @Majella. Allow me to share some insights in correcting your negative accounts receivable.

 

 

The best way to approach this is by creating a Journal entry. Here's how:

 

  1. Click the + New button, then select Journal Entry (JE).
  2. On the first line, choose an Offset Account for the credit and the Accounts Receivable for the debit.
  3. Input the amounts, then choose the customer's name.
  4. Select Save and close.

 

I recommend consulting your accountant to help you choose the accounts and the process.

 

Then, let's do a Receive Payment transaction to link the JE we created:

 

  1. Click the + New button, then select Receive payment.
  2. Choose the customer.
  3. Tick the box of the JE.

 

For future reference, here's a guide on getting a copy of your JE: Print a journal entry report in QuickBooks Online.

 

Let me know if you have further concerns about your invoice. I'll be here to provide information. Have a great day!

M
MajellaAuthor
January 10, 2024

I already did this, but it resulted to an unapplied Cash Payment Income in my P&L statement (Cash Basis).

C
CharleneMaeF
January 10, 2024

I admire you for going through the steps shared by my colleague above, Majella. Allow me to join you in this thread and share the possible cause of the issue.

 

When creating the journal entry in QuickBooks Online, may I know the date or the reporting period you used? This information could potentially explain the occurrence of unapplied entries. It is important to note that for accrual-based businesses reporting on a cash basis, it is advisable that the entry is dated in the current year (2023) to avoid impacting the 2021 and 2022 financials.

 

In addition to the method mentioned, creating an invoice for 2023 statements is a viable approach. It won't affect your previous closed books but will clear the unapplied payment and remove the negative balance from the customer's account.

 

If you have further questions about A/R or any concerns, you can always reply to this post. I'll be willing to lend a hand. Have a good one!

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