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linda186
February 16, 2024
Question

Cleaning up Accounts Receivable

  • February 16, 2024
  • 1 reply
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We have a small NPO who has annual fundraisers.  Some of the donors choose to pledge their donation and pay over the course of a year.  We record those pledges as a credit to the Fundraiser revenue account and a debit to Accounts Receivable (A/R).  There have been in past years partial payments made but not to the A/R account on these pledges.  Payments were posted as a "Create a sales receipt" which resulted in a credit to the Fundraiser revenue account and a debit to Cash.  It should have been "Record payment." These postings have happened in previous years and have not been cleaned up.  I believe that our revenue account has been overstated and am wondering how to clean up the A/R account (from previous years).  Thank you

1 reply

Rainflurry
Rainflurry
February 16, 2024

@linda186 

 

You're correct - both your revenue and A/R are overstated by the same amount.  You will need to determine which customers A/R is overstated and then issue credit memos for the same Products/Services that are on invoices.  Then, apply the credit memos to the invoices.  That will close out A/R and reduce the overstated revenue.  You can date the credit memos in 2023 if you haven't closed it out or 2024 if you have.  If the amount is significant, you may need to seek the advice of your CPA/tax accountant.  

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