Previous bookkeeper tracked accounts receivable through one charge account. For this year we want to enter customer accounts individually like they should be. How do I clear out the balance on the charge account so I can set up individual accounts?
If you mean that your A/P account was one large account for all Vendors, don't post any new bills to the old A/P account. Pay the remaining balance off and set up individual accounts for each new vendor.
(You used the term customers. I assume you meant vendors when speaking of A/P).
Oops sorry, I meant accounts receivable! Over the past 4 years all charged accounts were posted to a "customer" named Outstanding Charges. All payments received were applied to that "customer", and the charges and payments received were all made by doing journal entries. I know this is the incorrect way to use QB and I've been trying to get the books straight for the past 6 months and this is the only area that I still have to fix.
If you have a lot of Receivables and many are past due and were for past years transactions, you may have trouble trying to change the invoices to individual customers. I certainly would not continue posting invoices to the "Outstanding Charge" customer. I would create individual customers and start to post charges to the new customer accounts.
When old payments come in that were posted to the generic customer, credit the generic customer. Eventually, that account total will (hopefully) be reduced to zero. Any past due amounts that you believe are not collectible should eventually be written off as Bad Debt expense anyway. (Speak to your Accountant on this matter).
For the new charges that are posted to the newly created customers, credit their accounts as they are paid. You need to assign a cutoff date separating the charges for the old "generic" customer and the new individual customers. Good luck.
Thank you. Yes there are an awful lot and many go back 5 years. Theoretically that sounds like the best way to work it. The challenge will be in tracking payments made to to older invoices verses the current ones, as well as deciphering the trail of journal entries made to that account. Good thing I enjoy challenges! I was hoping I could create customer accounts with opening balances for all the outstanding charges and make a journal entry to cancel out the "Outstanding Charges" balance or will that not work the way QB is designed?
Don't use journal entries or opening or beginning balances for AR or AP. That just makes a further mess of your data file.
Use real transactions with real dates, with real names and items.
Yes, I see the mess it makes after previous bookkeeper used journal entries for 4 years and I'm trying to clean up the mess and make it right for this year. Guess there's just no simple fix to this mess I've inherited.
You really have to figure out how the data was being handled manually using journal entries, to help sort this out.
As you figure out each customer balance, you likely can offset the income originally posted with the receivable amount originally posted. Then, once you have all actual customer invoices entered, you are left with the bogus entries and need to determine how these were created.
The nice thing about this type of mess is, the person who made the mess tends to be consistent in their errors.
Yeah, I have at least 2000 entries made by at least 5 different bookkeepers over several years to decipher so the only consistency I have is that they all did it wrong! This is going to be a challenging project to complete. I appreciate the help and input I have received on this site. Mostly it's confirmed the way I thought it should be done, but was hoping for a quick fix!
