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How To Clean Up Accounts Receivable in QuickBooks?

October 19, 2012 by Ed Becker

Ever scratch your head while looking at a  journal entry made by your CPA, especially one that leaves items unmatched within your A/R ledger? You may see a corresponding invoice and payment in the A/R ledger that net to a “zero” balance, so why are they even sitting there on an A/R report?  Shouldn’t they cancel each other out?  Here’s the deal…

As our clients create invoices and post payments to their data files, they can usually handle the basic functions needed to keep their Accounts Receivables in order.  However, in many instances, the timing of  posting payments and creating invoices can leave a QuickBooks file with items that have a zero balance.

How do I fix this you ask?

In the following screen shot, you’ll see an example of a client (Allard) who paid for their project in advance.  The invoice was created after the fact.

Allard is now appearing in the Open Invoices report and clearly shouldn’t be.  That invoice isn’t open.  In order to correct this, you need to tell the software that the payment and invoice are matched to each other.  Once you do this, they will net to zero and will be removed from your open invoice listing.

To do this, double-click on the payment to pull up the payment screen, as shown in the screenshot below:

Next, check off the invoice that this payment applies to (in the screenshot above, you’ll see I checked the invoice in the row highlighted in green).  Then, hit the “Save & New” button. Once you do this, your unmatched items will no longer display on your A/R reports.

In this case, there are a few other things to consider regarding how QuickBooks will handle the deposit made in advance and also when the revenue will be recognized. To make sure you are prepared for tax time, these items should be discussed with your CPA and/or your outsourced bookkeeping professional.

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