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QuickBooks Solutions  Volume 3 800-216-0763

Preparing for Year End in QuickBooks

Reviewing your QuickBooks company file for problems and making corrections will help you avoid problems in the future plus reduce the time required to prepare business tax returns at year end.

  • Run an updated general ledger report and display on screen so it can be checked for errors. Start your review on the last page and work your way to page one. Reviewing income and expense accounts is easier to understand than reviewing balance sheet accounts so begin at the end of the report.  You will find most  mistakes occurring in the income and expense section. Specifically, look for transactions that are coded to wrong accounts and make corrections. Look for consistency in the way you code transactions. For example, if you are paying a monthly loan, determine that all 12 payments show up in the same account.
  • Run the accounts receivable aging summary report. Using a 12/31 date, write off transactions that have been paid but still show up as unpaid, remove credit amounts that are erroneous, write off transactions that are bad debts.   To see the details of all customer balances, double click on the grand total amount (bottom right total of report). You can read more about what causes errors on this report and how to correct them in the next article.
  • Run the accounts payable aging summary report. If this report shows vendor bills that have already been paid, or will not be paid determine why they still appear on the report and enter appropriate adjusting transactions as of 12/31.  If you see negative amounts on this report that are not valid vendor credits, determine why they exist and enter appropriate adjusting transactions.
  • From your bank reconciliation window.  See what old transactions have not yet cleared the bank.  Determine why they have not cleared.  You can void the uncleared transactions that you know will never clear only if they are not in a closed period.  The period is closed when your accountant has already reviewed the financial activity or you have prepared financial reports for banks and board members for that time frame.  For transactions in closed periods that still appear uncleared by the bank use the following procedures to adjust your books:
    • Check that has still not cleared the bank - use the  'make deposit'  activity window to reverse this amount off your books. Enter today's date, use the same account that was used on the original check/bill,  and enter the amount of the check, .  In the memo field put the check number and payee and any other information you may have.  
    • Deposit that has still not cleared, do the research to discover why this is the case, and use the 'write check' activity window to reverse this amount off your books. Enter today's date, the amount of the deposit,  enter an income account, and in the memo field describe the deposit and enter any pertinent information.
    • On your next bank reconciliation, clear both the original transactions and the reversing transactions created.

Discovering and making these corrections will help you avoid errors in the future. We can help you with this task, provide you with the supervision and training needed to locate and make corrections.  We come on-site or work through remote access to demonstrate corrections, guide you step by step in the review of your file, and provide explanations along the way.  One step at a time, at a pace that is matched to your level of experience, we help you understand your books.  Call and ask for Linda Saltz, Certified QuickBooks Pro Advisor, for more information.

Year end topics and facts for the small business

  • Social Security limits, Mileage Rates, Pension limits       Read more
  • How to print W-2's in QuickBooks                                     Read More
  • How to print 1099's in QuickBooks                                     Read More
  • Checklists for in-house payrolls at yearend  
    (W-2, 940, NJ927, and more)                                                 Read More
  • How long to keep business records                                   Read More
  • S Corp owners - Reasonable wages and distributions    Read More

Wonder why negative amounts show up on the accounts receivable aging report ?

Listed below are a few causes of negative numbers:

  1. Customer overpaid.
  2. The payment from the customer was entered into QuickBooks before the invoice or statement charge.
  3. A credit memo was issued to the customer, but the customer never took advantage of the credit.
  4. An invoice transaction was never created in QuickBooks.
  5. A sales receipt transaction was created for the sale, and a receive payment transaction was entered to show the payment.
  6. Payment was applied on account to the wrong customer account.
  7. A receive payment transaction was entered two times on the customer account.
  8. To link the customer payment to the invoice, you correctly used a receive payment transaction. In the next activity window, 'make deposits', the account should read 'undeposited funds'.  If it was changed to accounts receivable, this error would show up as a negative amount on your open invoice list. 

Each of these problems require several steps to make corrections. Over the next few newsletters we will address how to make corrections.  Before you can make corrections, you need to identify the source of the problem.  Read more

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