The following table is the Recipe Reference Card for the keyboard shortcuts included in this article:
|
Find |
Ctrl+F |
|
Delete the line |
Ctrl+Del |
|
Save and close |
Alt+A |
|
Advance to the next field |
Tab |
|
Regress to the previous field |
Shift+Tab |
|
Customize the report |
Alt+M |
Clearing stale undeposited funds
When the Undeposited Funds window includes customer payments, which you know have already been deposited, recorded, and reconciled, the Income or Unearned Income and Undeposited Funds accounts are overstated. You can use this recipe to efficiently combine the cleared deposit with the undeposited funds.
Getting ready
Verify that the appropriate bank account is reconciled for the period containing the stale undeposited funds. If not, this can be resolved simply by deleting the recorded deposit and recording the deposit of the undeposited funds.
How to do it…
- With the Find tool (Edit | Find or Ctrl+F), use the Amount filter, along with the Date filter, if necessary, to bring up both the deposit and the customer payment already recorded.
- Open up the deposit, and click on the Payments button. Check off the appropriate transaction, and click on OK to add this to the deposit.
- Click on the line item for the deposit originally on the screen, that is, the duplicate of the payment that you just added to this screen. Click on Edit | Delete Line (Ctrl+Del), and then Save and Close (Alt+A).
How it works…
The only way to directly delete an item added to Undeposited Funds is to delete the underlying customer payment or sales receipt. However, this is not advisable, because these transactions are typically accurate representations of a real-world activity.
Additionally, when the deposit was recorded, the related account duplicated the income or customer deposit from the original invoice or sales receipt.
Therefore, the deposit itself needs to be modified to simultaneously remove the duplicate offset account, and resolve the outstanding Undeposited Funds item.
There’s more…
For a printable and memorizable list of all outstanding items in the Undeposited Funds account, open the Undeposited Funds ledger. Click on Customize Report | Filters | Choose Filter | Cleared | No. On the Header/Footer tab, in the Report Title field, enter Undeposited Funds, and click on OK.
Adjusting cash basis receivables or payables balances
Does your cash basis balance sheet show balance in your receivable or payables accounts? This recipe will take you through the two-step process of resolving these items:
- Locate them
- Adjust them
Getting ready
To find out which customers and vendors are responsible for your cash basis accounts receivable or accounts payable balances, respectively, run the following report:
- Go to Reports | Custom Reports | Summary.
- Set Dates to All. If you desire a cut-off date, leave the From field blank, and enter your cut-off date in the To field.
- Set Report Basis to Cash.
- Set Display rows by to Customer or Vendor.
- Go to Advanced, and set Display Rows to Non-zero.
- Go to the Filters tab, and set Account to Accounts Receivable (or Accounts Payable).
- Go to the Header/Footer tab, and set Report Title to Cash Basis A/R by Customer or Cash Basis A/P by Vendor. The report total matches your balance sheet account total for the same cut-off date.
How to do it…
- Double-click one of the account balances to reveal the detail, and remove the columns irrelevant to this effort.
- Scan the activity for patterns, unusual items, or clues about the cash basis balance.
- Gain an understanding of the transaction, and resolve the items by changing the accounts, changing a date, making a journal entry, noting that no adjustment is needed, or other action.
- Refresh the report, and confirm either a zero balance or an appropriate cash basis balance.
How it works…
Some of the most likely patterns to scan for include the following:
- A Balance column, which keeps returning to 0.00, and then stops returning to 0.00:
- An unusual transaction Type:
- A recurring figure in the Balance column. This lets you know that at least one culprit occurred before the recurrence began:
- A zero balance right before a transaction, which is also the aggregate balance sheet account balance:
There’s more…
The most common reasons for a cash basis receivables or payable balance are:
- Payment date precedes bill or invoice date, and the report cut-off is between both the dates
- Offset account is a balance sheet account, and the bill or the invoice is unpaid
Writing off stale receivables
Making a journal entry to write off stale A/R in bulk is easy, but this makes it difficult to trace through the accounting records. The possible uses for more precise information include producing a trail for taxing authorities, internal or independent auditors, or banks. A separate spreadsheet may suffice, but it may be difficult to coordinate. This recipe focuses on straightforward ways to write off these balances in a detailed, but effi cient fashion.
Getting ready
Have your criteria ready for which invoices are to be written off. The A/R Aging Summary report may help (Reports | Customers & Receivables | A/R Aging Summary).
To further analyze your oldest receivables:
- Go to Customize Report | Age through how many days?, and type 360.
- Go to Filters | Choose Filter | Aging | >=, and type 90.
- Go to Header/Footer, add the text: Older Than 90 days to the Report Title, and click on OK.
How to do it…
To write off a stale receivable:
- Go to the Customers page or Home Page | Receive Payments.
- From the Received From drop-down box, select the appropriate customer. If applicable, select the particular job instead.
- In the Date field, enter the effective date of the writeoff.
- Click on the Discount & Credits button.
- In the Discount and Credits pop-up window, fill in the amount to be written off, the writeoff account (generally Bad Debt), and the same class from the original invoice, if class tracking is used in the file:
- The completed screen should have 0.00 in the Amount and Payment fields. Include the amount written off in the Discount field:
If an allowance for doubtful accounts is used against bad debt for writeoffs, then set up the Allowance account as an Accounts Receivable account type , and select the Allowance account from the drop-down box at the top of the Customer Payments screen. A set of journal entries can be used later, to remove the amounts from both Accounts Receivable and the Allowance account.
There’s more…
This is the same procedure that can be used to record discounts, but the key is that an income or expense account must always be selected. This procedure is not appropriate for a balance sheet account to be selected, such as debiting a liability account while crediting A/R, or debiting the Allowance account while crediting A/R. This will cause a cash basis balance sheet report to be out of balance.
If that combination of debits and credits is essential, then use a journal entry instead. Then, apply the journal entry to the original invoice, by opening the invoice, and clicking the Apply Credits button.
When this recipe is used to write off receivables, Act. Revenue is reduced in the Job Profitability Summary report , and there is no effect on the Item Profitability Summary report. The same reporting results are attained if a journal entry is used to debit Bad Debt Expense and credit Accounts Receivable.
If a Credit Memo is used instead, Act. Revenue is reduced in the Job Profitability Summary report as well as the Item Profitability Summary report.
In order to increase the Act. Cost column in the Job Profitability Summary report instead, use the Write Checks screen in an unusual fashion: on the Items tab, use an Other Charge item called Bad Debt or Writeoffs. When you create this item, link it to the Bad Debt Expense account. On the Write Checks screen, be sure to enter the Customer:Job name as well as the writeoff amount.
On the Expenses tab, select Accounts Receivable, and enter the writeoff amount as a negative number, so that the total amount of the check equals 0. Be sure that the check bears no check number, and clear it in the next bank reconciliation.
This technique causes both the Job Profitability and Item Profitability reports to show the transaction as an expense, rather than as a reduction of revenue. It works because QuickBooks includes the Write Check transactions in the Act. Cost column of these reports.
Writing off stale payables
Making a journal entry to write off stale A/P in bulk is easy, but makes it difficult to trace through the accounting records. Possible uses for more precise information include producing a trail for taxing authorities, internal or independent auditors, or banks. A separate spreadsheet may suffice, but may be difficult to coordinate. This recipe focuses on straightforward ways to write off these balances in a detailed but efficient fashion.
Getting ready
Have your criteria ready for which bills are to be written off. The A/P Aging Summary report may help (Reports | Vendors & Payables | A/P Aging Summary).
To further analyze your oldest payables:
- Go to Customize Report | Age through how many days?, and type 360.
- Go to Filters | Choose Filter | Aging | >=, and type 90.
- Go to Header/Footer, add the text: Older Than 90 days to the Report Title, and click on OK.
How to do it…
- Go to Vendors or Home Page | Pay Bills.
- Consider using the Filter by drop-down list to only show bills from a particular vendor, and consider using the Sort by drop-down list to organize the payables list by Due Date.
- For one single vendor, check off the fi rst bill to be written off.
- Click on the Set Discount button .
- In the Discount and Credits pop-up window, fi ll in the amount to be written off, the writeoff account (generally the same expense account as the original bill), and the same class from the original bill, if class tracking is used in the file:
- Click on Done, and proceed to the next bill for the same vendor.
- Make sure the Payment Date field is the effective date of the write off.
- The completed screen should have 0.00 in the Amt. to Pay field. Include the amount written off in the Disc. Used field:
- When the writeoffs for that vendor are complete, click on Pay Selected Bills, followed by Pay More Bills for additional writeoffs.
There’s more…
The advantage of this recipe is that the transaction is created and applied to the bill in a single step. However, the drawback is that it does not appear in the Job Profitability Summary or the Item Profitability Summary reports. For that to occur, create a vendor credit instead, by using the Enter Bills screen, and clicking on the Credit button.
Then, use the Items tab to record the credit, using the same item that was used in the original bill. Additionally, use the Customer:Job field to apply the credit to a particular job.
For a partial writeoff, after the Discount and Credits window is closed, be sure to manually input 0.00 into the Amt. to Pay field. The default is to include the remaining balance in that field, and this recipe assumes that the current action is only to record writeoffs, not payments to vendors.
Balancing the balance sheet
How can a balance sheet get out of balance in a software program? If you’re reading this recipe, you may have already seen for yourself that the impossible can happen. The following is a procedure to root out the transaction which is causing this phenomenon.
Getting ready
A balance sheet prepared on the cash basis can be out of balance if certain transactions were saved, for example if the Discount feature was used with a balance sheet account.
How to do it…
- Open a Balance Sheet Summary report.
- Click on the Customize Report button and in the Dates drop-down box, select All.
- If the report is on the accrual basis, change the Report Basis to Cash.
- In the Display columns by drop-down box, change the selection to Year, and click on OK.
- Look at the balance sheet, and identify the earliest year in which the balance sheet is out of balance.
- Click on the Customize Report button . In the From and To fields, enter the beginning and ending dates of the year identified in the previous step.
- In the Display columns by drop-down box, change the selection to Month, and click on OK.
- Look at the balance sheet, and identify the earliest month in which the balance sheet is out of balance.
- Click on the Customize Report button . In the From and To fields, enter the beginning and ending dates of the month identified in the previous step.
- In the Display columns by drop-down box , change the selection to Week, and click on OK.
- Look at the balance sheet, and identify the earliest week in which the balance sheet is out of balance.
- Click on the Customize Report button . In the From and To fields, enter the beginning and ending dates of the week identified in the previous step.
- In the Display columns by drop-down box, change the selection to Day, and click on OK.
- Look at the balance sheet, and identify the earliest day in which the balance sheet is out of balance:
- Run a transaction journal (Reports | Accountant & Taxes | Journal), limit the transactions to that day, and scan the report for the transaction responsible.
- Delete the transaction which caused the imbalance, which is usually a Customer Payment or other A/R or A/P data entry screen, and make a journal entry instead, to cover the appropriate debit and credit.
There’s more…
If the Discount feature was used to reclassify an Accounts Receivable balance to Retainage Receivable, make a journal entry to achieve the same General Ledger effect instead, and apply the transaction to the original invoice, by opening the invoice and using the Apply Credits button.