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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:

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

  1. Change your Sales Tax preference to Due on receipt of payment, which is the cash basis option, before running the Cash Basis Balance Sheet.
  2. 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)
  3. 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)
  4. 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.
  5. 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.
  6. 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
Hector Garcia

Hector Garcia

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