I've inherited a QB's file which has many accounts that have balances that are old with little or no records. These accounts go across all types: Assets Liabilities, Equity, etc. I've created a new QBs file for this current year, however, I need to bring the balances for those accounts from the old QBs. Thanks in advance.
What's the best way to clear out old accounts?
Answers
Can you clarify what a 'QB' file is? Is this
This is also a prime example for why you should always take the time to include backup information for yourself or anyone else looking at something in the future. If you are like me, I can't remember what I ate for dinner last night much less what a unique transaction was meant to accomplish a month ago (or longer).
QB = Quickbooks.
Definitely have been including backup for what I've been doing. Some of the stuff goes back quite a long time ago (2006) so it's not really worth the effort IMO to go back and figure it out. Ultimately, I want to move to a suspense account or some account that would reclass those balances but haven't encountered anything like this before.
When we switched from desktop QBs to QBs online for our personal business, I just made a JE to bring in all the AP/AR balances. Would this work for you?
How to remove these balances from the books really depends on the real-life story behind each one.
For example, if there are assets that have been sold, then you'll need to see if this sale was properly reported on their
But old accounts receivable, if they are cash basis filers, can be written off against their income account. If they are accrual basis filers, old A/R can be written off against Bad Debt Expense...but check the tax return first to make sure the books align with the return (see below).
Sometimes the tax preparer makes annual adjustments to fix account balances but doesn't send these adjustments back to the client. You might be able to follow that trail to determine how to adjust account balances to 0.
Quite a few are small invoices that were never paid that can likely go to bad debt expense. We also have a lot of small bills that were old an unpaid and likely will not be paid due to the vendor going out of business, etc.
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I'm not a Quickbook user but it appears you need to process a credit memo in your Accounts Receivable module and offset bad debt expense. That should clean up the A/R aging records and the GL balance.
I need to clarify, when I did this I made a journal entry to being over the account receivable balance and applied it to that customer, so that at the beginning of the year I could run and AR Report and each customer account showed the correct balance. I then had to do the same thing for the AP side. Of course this is only an ideal method for small business. In a large setting it would take too long. Agree with Kevin, if you are writing off an uncollected account, one method would be to create a credit memo to bad debt. You would then want to receive payments and apply the credit memo against it. I use different versions and found it's a little different depending on which version you use.
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