A Negative In Your QuickBooks Balance Sheet

It is not ideal to have a CBBS or Cash Basis Balance sheet to reflect Accounts Receivable [A/R] or Accounts Payable[A/P] balances. This is because these accounts track open (unpaid) invoices and unpaid bills. Several companies use A/R & A/P accounts and report accounts on a cash basis. QuickBooks is not designed to work in this way when there are reporting anomalies present, and this can create discrepancies in its working.

Hence to ensure that cash basis reports have no anomalies you need to use only those transactions that have no effect on Accounts Receivable and Accounts Payable.

Every QuickBooks transaction has one source account and more than one target accounts. Run the Transaction Journal report and view the posted accounts for any transaction. The first line in the “Transaction Journal Report” shows the source account while the subsequent lines reflect the target accounts.

A/R Credit Balances might happen due to several reasons:

1. There is an invoice with item recording retainage to another current asset account.
2. A particular customer payment not linked to an invoice.
3. Payment is linked to a post-dated invoice through the report date is before the invoice date.
4. Customer Credit Memo not linked to an invoice or a refund check.
5. Deposit present in the A/R account though not linked to payment or an invoice.
6. A/R is the source account for a journal entry, however, the target account is the balance sheet account.
7. Journal entry crediting A/R as a target account

Also Read: Perform a Clean-Up Before Upgrading to QuickBooks Desktop

Solution

Step 1- Find the cause of the transaction

1. Open Invoice Report
2. Unpaid Bills Report
3. Customer Transaction Details
4. Vendor Transaction Details Report

Step 2- Fix the root cause transaction manually

1. Go to Receive Payments window (A/R) and link transactions.
2. Temporarily delete transactions
3. Reenter transactions from the “Memorized Transactions list.”
4. Memorize the open transactions and then delete them.
5. Edit your Journal Entries (JEs)
6. Separate the A/P and A/R portions of journal entries
7. Shift the A/R portion to the first line (source) of the Journal entry. The Journal Entries that are linked to an income or expense account will go off the report. The Journal Entries that are linked to a balance sheet account will stay in the report.

Step 3- Do preventative changes to your procedures

How to boost obstructed cash flow?

• A focus on DSO or Days of sales that are sitting or at times stuck in A/R will allow accounts receivable down and free up the required cash for a business.
• Collect receivables from large companies.
• Use the “Accounts Receivable Aging Report” as a tool to turn A/R into cash. This is also a great management tool and helps in managing your receivables and analyzing how your staff is performing

Hopefully, the blog gave you clear insight on how to clear the negative amount in your company Balance Sheet. Keeping your financial documents up-to-date and free of discrepancies is essential. Though, the steps can and solutions might be confusing at times. Speak to an expert at QuickBooks Desktop Support Phone Number +1-855-365-6O12.