Wednesday, 18 August 2010
How to create opening balances for Accounts Receivable?
There are few methods of creating opening balances for Accounts Receivable account. The methods are:
- Entering opening balances (lump sum) directly into the customer profile.
- Entering opening balances via General Journal entry.
- Entering opening balances via invoice.
The first method, entering opening balances directly into the customer profile page, is good for user who needs to create the opening balances fast; thus, they enter the opening balances as a lump sum (total amount of all the outstanding invoices) into the Opening Balance field of the Customer Profile page.
The disadvantage of this method is that you have to track the payment received for each individual invoice manually.
The advantage for entering opening balances of Accounts Receivable via General Journal is user can record the outstanding base on per customer per invoice amount. You can record every outstanding invoice as a General Journal transaction.
In this way, QuickBooks can help you manage the payment for your invoices.
However, General Journal method does not show the invoice number and the transaction type name ‘General Journal’ will be show in the Statement.
The last method, enter opening balances via invoice is a better method that I preferred. Other than allowing you to capture the individual outstanding invoice, it captures the invoice number as well. This will help when printing Statement for customer. Besides, we can see the historical link between the payment received and the invoice.
To use this method first you have to create a new item for opening balances. Item profile:
Item type: Other Charge (or Service)
Item Name/Number: Opening Balance
Description: Opening Balance
Account: Opening Bal Equity account
You need to use this item, Open Balance, for all your outstanding invoices.
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