@Rainflurry
Yes they are payments received that were not applied to invoices. Or they are credit memo's created for Op Cost Adjustments. One is rent received 12/22/23 for a 1/1/23 invoice.
Also I still have unpaid invoices from 2020 that I will eventually write of as bad debt straight from the A/R account.
We do not use Prepaid rent in our accounting. We have been treating this as Accrual accounting until the end of the year and then providing a Cash Basis report for the tax accountant. This is the first time I have realized that the when I apply credits or write off a debt, it is changing the previous years balance sheet/operating statement.
@JoshuaSuntide
A few things:
1) "I still have unpaid invoices from 2020 that I will eventually write of as bad debt straight from the A/R account."
How/why are you writing off uncollectible invoices to bad debt expense? Cash basis taxpayers do not have bad debt expense because they only report income when payment is received. If payment is never received, you should zero out the invoice - no income, no expense = $0 change in net income. Accrual basis taxpayers need to write off uncollectible A/R because the income was recognized when the invoice was issued and the bad debt expense offsets that.
2) "We do not use Prepaid rent in our accounting. We have been treating this as Accrual accounting until the end of the year and then providing a Cash Basis report for the tax accountant."
That makes perfect sense and, intuitively, you would think that would work. However, the issue is that the cash basis balance (BS) sheet shows A/R, which is a red flag. This is partly a limitation of QB. Since you received payments, QB will not ignore them when you run a cash basis BS, so it reports the cash in your bank account and the corresponding reduction in A/R. It's up to you or your tax accountant to determine why there is an A/R balance on your cash basis BS and make the necessary adjusting entries. Deposits are not income unless the deposit will be applied to rent, but other prepaid rent should be income when received.
3) "This is the first time I have realized that the when I apply credits or write off a debt, it is changing the previous years balance sheet/operating statement."
I'm confused. Are you trying to apply the credits to invoices dated in previous periods?
