Home » How to fix A/R and A/P Balances in a cash-basis Balance Sheet in QuickBooks?

How to fix A/R and A/P Balances in a cash-basis Balance Sheet in QuickBooks?

Continuation from original article: Why are there A/R or A/P balances in my cash basis balance sheet?
Excerpt from original Intuit article:
http://support.quickbooks.intuit.com/support/articles/INF12397

First Step, run these reports to isolate the transactions causing the problem, the root cause

Open Invoices report, for Accounts Receivable balances in cash basis balance sheet

Choose Reports > Customers & Receivables > Open Invoices.
Click the Date drop-down arrow and select the correct date.
Click Customize (Modify for 2011 and earlier) Report, Advanced, and then click As of Report Date.
The payments that appear on the report (included in the Cash Basis Balance Sheet) have been received but not applied to an invoice.

Unpaid Bills report, for Accounts Payable balances in a cash basis balance sheet

Choose Reports > Vendors & Payable > Unpaid Bills Detail.
Click the Date drop-down arrow and select the correct date.
Click Customize (Modify for 2011 and earlier) Report, Advanced, and then click As of Report Date.
The bill payment checks that appear on the report (included in the Cash Basis Balance Sheet) have been entered but not applied to a bill.

Customer Transaction Detail report for additional Accounts Receivable balances in cash basis balance sheet

Choose Reports > Company & Financial > Balance Sheet Standard.
Click Customize (Modify for 2011 and earlier) Report.
On the Display tab, for Report Basis select Cash.
Delete the From date, keep the To date, and click OK.
To bring up the Transactions by Account report, double-click (QuickZoom) the A/R amount.
Click Customize (Modify for 2011 and earlier) Report.
On the Display tab, delete the From date and keep the To date.
Click Advanced, select the Open Balance / Aging Report Date option, and click OK.
Select Customer in the Total by field.
Click the Filters tab:
1. In the Filter list, click Account.
2. Click the Account drop-down arrow and select All Accounts Receivable.
3. Select No for Include Split Detail.
4. In the Filter list, select Paid Status, select Open, and then click OK.
5. (Optional) Click Memorize to save this report to use again.
Each nonzero customer subtotal affects your A/R balance.

Vendor Transaction Detail report for additional Accounts Payable balances in cash basis balance sheet

Choose Reports > Company & Financial > Balance Sheet Standard.
ClickCustomize (Modify for 2011 and earlier) Report.
On the Display tab, for Report Basis, select Cash.
Delete the From date, keep the To date, and click OK.
To bring up the Transactions by Account report, double-click (QuickZoom) the A/P amount.
Click Customize (Modify for 2011 and earlier) Report.
On the Display tab, delete the From date and keep the To date.
Click Advanced, select the Open Balance / Aging Report Date option, and click OK.
In the Total by field, select Vendor.
Click the Filters tab:
1. In the Filter list, click Account.
2. Click the Account drop-down arrow and select All Accounts Payable.
3. For Include Split Detail, select No.
4. In the Filter list, select Paid Status, select Open, and then click OK.
5. (Optional) Click Memorize to save this report to use again.
Each nonzero vendor subtotal affects your A/P balance.

Step 2, Manually fix the transactions casing the issues:

Important: make a back up your company data file before continuing!

Change your Sales Tax preference to Due on receipt of payment, which is the cash basis option, before running the Cash Basis Balance Sheet.
Link transactions in the Receive Payment window (A/R) – details in Intuit article . Basically, you need Apply the payments.. also make sure the customer payment is date on or after the applied invoice date to prevent these issues, you can either change the payment date or the invoice date. Note that QuickBooks applies income to Profit & Loss in cash basis on the payment date (if dated AFTER invoice date) or on the invoice date (if payment is dated BEFORE the invoice date)
Link transactions in the Pay Bills window (A/P) – details in Intuit article . In other words, apply the payments to the bills… Note that QuickBooks applies expense to Profit & Loss in cash basis on the applied payment date (if dated AFTER Bill date) or on the Bill date (if payment is dated BEFORE the Bill date)
Be sure that your service, non-inventory part, and other charge items are linked to income and expense accounts:
1. Choose Lists > Item List.
2. Look for any balance sheet accounts (assets, liability, or equity) listed in the Account column.
3. Assure any items pointing to asset accounts are set up correctly. Some items (e.g., sales tax, retainers) should point to asset accounts.
Temporarily delete the transactions you identify as problems:
1. Memorize the open transactions and then delete them.
2. Print your cash basis reports.
3. Reenter the transactions from the memorized transactions list.
Edit your journal entries (JEs):
- Separate the A/P and A/R portions of journal entries that combine several transactions involving B/S accounts, into separate JEs.
- Move the A/R portion to the first line (source) of the JE. Those JEs that are offset to an income or expense account will drop off the report. The JEs that are offset to a balance sheet account will remain on the report.
  Note: Press Ctrl+Insert to add one line to the Journal Entry and press Ctrl+Delete to delete one line from the JE