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How to Temporarily Move Transactions from Accounts Receivable?

At end of year we had one customer that had a surplus balance. We wanted to get that balance out of Accounts Receivable and into an Asset account for customer overpayments. Then at the beginning of the next year we wanted to move that back into Accounts Receivable and let the surplus payoff a future transaction.

The problem is Quickbooks now shows both journal entries to remove and add back the amount of the surplus balance in Accounts Receivable. Even though they should zero each other, the transactions remain in Accounts Receivable. How do I get them to clear?

I understand the A/R is probably a "managed" account that doesn't like to have direct transactions made against it. For the future, how should situations like this be transacted? I don't want to leave the positive A/R for any customer in A/R because the accountant uses an accrual to cash conversion method that ends up taking the surplus payment as income, when in fact it is just an asset.

Reply to
W
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When a customer has a credit balance, companies reporting on a GAAP basis need to report these credit balances as a current liability.

Set up two accounts, one a current asset contra account to accounts receivable called Customer Credit Balances and a short term liability account also called Customer Credit Balances. Make a journal entry using these two accounts at the reporting period end to report any credit balances. On your financial statements net the receivable and contra accounts. Reverse the above entry on the first day of the next reporting period.

It should be noted that the same treatment should also be done for any vendor debit balances you may have in accounts payable.

You should not have to muck around adjusting any actual receivable accounts.

Reply to
Haskel LaPort

What did you mean by "On your financial statements net the receivable and contra accounts"? Are you saying to create some kind of new parent account that would show as its sub accounts A/R and the contra account? How would I do that?

The problem is we are trying to avoid having a negative value in A/R because the presence of that creates a bug in how Quickbooks does accrual to cash conversions. The accountant is overcoming this by starting from an accrual version of the books and then working backwards to a cash version. In their method they convert the negative A/R balance into a sale. If we leave the negative A/R, and then create two opposing asset/liabilities, I don't see how it would solve the problem of still having a negative A/R balance for a customer.

Reply to
W

Send me your e-mail address to aipblist1 at gmail dot com. I have a document from the Intuit certification guide that will help address this issue. I tried posting it but my news server won't post the message for me.

Reply to
Laura

No, not a parent account just a conta account to accounts receivable. When the two accounts are netted together the balance equals only the positive receivables.

The accountant should treat the negative amount as a liability not a sale.

Reply to
Haskel LaPort

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