Quickbooks is a superb program for small business accounting because of a) the number of customized industries it supports, b) the number of add-on modules that expand your capabilities and c) the ease with which we can provide service to you with your monthly, quarterly or annual bookkeeping services. However, setting up accounts receivable balances when transitioning to Quickbooks from another accounting program is not well documented. In fact, I spent half a day researching how to accomplish this in Quickbooks. Here is the answer!
For those of you looking for a complicated answer with many moving parts — I am sorry to disappoint you! The answer for inputting opening accounts receivable balances is really simple. First, create either a) your customers with open invoices or b) a single customer called ‘beginning balances’. The answer to this question is really determined by whether you use customers and invoicing in Quickbooks. If you do, then input your open invoices and customers so that you can later post payments. If you instead use general ledger entries for very infrequent receivables, then use the single customer method.
Second, create an inventory item under the Lists -> Item List menu item. Label this item ‘Beginning Balances’ and set the general ledger account to post as the Opening Equity balance sheet account. This is the account that all invoices will post to if they use this item.
NOTE: If you properly input all your other beginning balances when created general ledger accounts, then a general ledger entry is created to the Opening Equity account. Adding the accounts receivable opening balances will help this account net to zero. Then you will know all your opening balances, well, balance.
Third, begin entering your open amounts as invoices. Use the Invoice module. For each invoice you enter, select the appropriate general ledger account. Then select the inventory item you created in step two above. Finally, input the amount and save! That’s all there is!
NOTE: Also know that credit balances are input using a credit memo. Do these at the end. Then enter a negative amount in the ‘amount’ column for an invoice. Quickbooks should then take you to the Credit Memo section where you can enter all your credit balances.
by David Knoble, CPA, PLLC
Serving Non-Profits, Businesses & Individuals
Rock Hill, SC