Solved

Entering Opening Balances - QuickBooks Premier Nonprofit Edition 2019

Forum|Forum|7 years ago
February 5, 2019
1 reply
0 views

Dear QuickBooks Experts,

I work for a nonprofit organization and we just bought and installed QuickBooks nonprofit edition. Now, we are having difficulties entering the opening balances for our balance sheet accounts as at the start of our new fiscal year which is January 1, 2019.

For instance, our balance sheet from our current system, as at December 31, 2018 has a total cash balance of USD 177,000 which is made up of funds balances from four (4) funding source below:

Grant 1 = USD 80,000

Grant 2 = USD 20,000

Contract 1 = USD 35,000

Unrestricted Funds = USD 42,000

Ideally, I would like to enter these opening funds balances and tagged them to these four (4) funding sources so that I will be able to generate profit and loss reports by the four funding source (customer: job) as well as by programs (Class) for any reporting period.

Secondly, I understand that I will need to enter Accounts Receivables and Accounts Payable using the invoice and enter bill module by debiting A/R and Credit Opening Balance Equity instead of Revenue account debiting Opening Balance Equity and Crediting Accounts Payable. When I do this, the revenue does not show in the Profit and Loss by Job or Class. As you are aware, the Profit and Loss report by job and class is a very important report for donors as it shows how much of their funds was received, expensed and remaining.

Find attached a file with sample opening balance entries based on what is recommended in QuickBooks manuals and user-guides and which is not working for us based on what I just described there above.

I would really appreciate if you could show me how to correctly enter these opening funds balances into our QuickBooks company file so that I will be able to generate Profit and Loss reports among other important donor reports.

I would greatly appreciate your assistance.

Ariiqi

QuickBooks Desktop

Best answer by Rustler

@Ariiqi wrote:

Secondly, I understand that I will need to enter Accounts Receivables and Accounts Payable using the invoice and enter bill module by debiting A/R and Credit Opening Balance Equity instead of Revenue account debiting Opening Balance Equity and Crediting Accounts Payable. When I do this, the revenue does not show in the Profit and Loss by Job or Class. As you are aware, the Profit and Loss report by job and class is a very important report for donors as it shows how much of their funds was received, expensed and remaining.

Sorry I can not help with your first question

as far as a/r and a/p are concerned, you need to create an item that links to opening balance equity and use that item on a bill (non inventory type item), or customer invoice (service type item).

Journal entries should be the exception when using QB, they often do not work as you think they should, and when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used. Journal entries also bypass accrual/cash reporting, and will not show on many reports.

RustlerAnswer

@Ariiqi wrote:

Secondly, I understand that I will need to enter Accounts Receivables and Accounts Payable using the invoice and enter bill module by debiting A/R and Credit Opening Balance Equity instead of Revenue account debiting Opening Balance Equity and Crediting Accounts Payable. When I do this, the revenue does not show in the Profit and Loss by Job or Class. As you are aware, the Profit and Loss report by job and class is a very important report for donors as it shows how much of their funds was received, expensed and remaining.

Sorry I can not help with your first question

as far as a/r and a/p are concerned, you need to create an item that links to opening balance equity and use that item on a bill (non inventory type item), or customer invoice (service type item).

Journal entries should be the exception when using QB, they often do not work as you think they should, and when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used. Journal entries also bypass accrual/cash reporting, and will not show on many reports.

qbteachmt

I recommend the book Running QB for Not For Profits, by Kathy Ivens.

The Checking is not a JE to OBE. It's real equity, not OBE. OBE is generic equity. You Make Deposit to Real Equity.

The reason to use Invoices, not JE, for AR, is that you will use it for the Customer and Job name as Grantor and Grant. The AP balances also are not generic, so you use Enter Bill. Now you see the regular input fields for Class tracking, as well.

Don't link your Invoice item to Opening Balance Equity. Make one Equity account and name it Restricted Fund Balance. That is what you need to use for the Grant AR. Again, Not OBE because you have Specific Tracking requirements.

The Enter Bill is a Vendor Name, and if that web hosting applies to a specific customer or grant, fine. That also isn't OBE; it's a prior Fund Balance activity.

What matters for Prior Equity, is if you are Cash or Accrual basis. Example:

For Either Basis, enter the open invoices dated historically using Real Items and the Enter Bills using Real items and accounts, Do not include these in the Trial Balance data for the prior year end; they are already going to be there. When they are paid in the New FY, that is reporting properly for Cash and for Accrual Basis. You don't need to use Equity at all, and you certainly need to avoid OBE. You have some Restricted and some Unrestricted Equity, never OBE.

And you avoid JE for anything with Names; never for AR, AP, QB sales or donation or pledge or grant, sales taxes, QB inventory, QB payroll. The program has Functions for this, and that is not JE.

A

AriiqiAuthor

Many thanks qbteachment for your superb explanation. What you just explained was my original thinking (i.e., using forms instead of OBE for A/R and A/P). But then I read these many QuickBooks books and user-guides that recommend using OBE for entering Opening Balances for A/R and A/P. It looks to me as if their thinking is informed by the fact that the A/R and A/P balances would have already been reported in the prior period and only waiting to receive cash and disburse cash for the expense. For example, in my case, the grants receivables would have already been reported as income/revenue in 2018 and the accounts payable would also have been reported in 2018.

Now, to record the Opening Balances in my new QuickBooks File at 1 January 2019 or 31 December 2018, if I were to use the forms (create invoice and enter bill) to record A/R and A/P Opening balances, I was wondering if I would be double-counting revenue and expense? For example, at January 1, 2019, my Opening would be recorded as follows:

A/R:

Debit Grants Receivable

Credit Grants Revenue

A/P

Debit Website Hosting and Maintenance (expense)

Credit Accounts Payable.

And these are the same entries I would have used in 2018 to record A/R and A/P. I hope I am not confusing myself even further. I completely get your point that I should avoid OBE but I was wondering if you can clarify once more time. I believe, you are saying that I should booked the outstanding A/R and A/P in the new QB file, indicating the relevant customer: jobs and classes just like I would if I am entering new A/R and A/P.

Ariiqi

Sign up

Login with SSO

Login to the community

Login with SSO