Answer:
NOTE: These instructions also apply to the following scenarios:
1- A balance exists in an A/R or A/P type account that needs to be adjusted up or down.
2- A balance exists in an A/R or A/P type account that needs to be moved to another A/R or A/R account.
3- A balance exists in another account that needs to be move to an A/P or A/R type account.
4- A balance exists in an A/P or A/R account that needs to be move to another type of account.
The reason for this is that entries into A/P or A/R have to have a vendor/customer and an invoice number associated with it. This is so that accurate balances can be maintained in both the GL, the sub ledger and vendor/customer balances.
If you think about it, a balance in AP (or AR) represents money that is owed to or due from a specific person and was associated with a specific invoice. Therefore if the balance changes then the amount you owe or receive from someone changes as well.
Scenario 1 - A balance exists in an A/R or A/P type account that needs to be adjusted up or down.
Many times the request for this adjustment comes from an auditor who wants a balance adjusted up or down by some amount. It is possible to adjust balances but this adjustment will need to be done against an invoice.
For A/P –
If you balance is being adjusted down then you will need to decide which invoices need to be adjusted for what amount. The best transaction source to use is the AP Credit Memo. This will allow you adjust any outstanding invoice for any amount up to its balance (reducing it).
If the adjustment is for something like an overpayment (you paid more than you owe and don’t have an outstanding invoice to match it against) you can enter a negative invoice. This will show in your select A/P Invoice to pay list and can be selected along with other invoices to reduce the amount owed.
If the balance is being adjusted up (you own more money) then you can either enter additional charges to an existing invoice (enter an API using the same vendor/invoice combination to adjust it upward) or you can enter a new invoice. In all cases you will need to specify the vendor and invoice number these go against.
Question – What if I don’t know what invoices to tie the adjustment to?
Answer – You will need to research and decide what invoices need to be adjusted or not do the adjustment.
Question – What if there are no outstanding invoices to tie the adjustment to?
Answer – Adjustments must have invoices to associate with. If all invoices are liquidated then you will need to make a new invoice outstanding or an adjustment to an existing invoice to make it outstanding via API entry. You should probably reconsider if these adjustments are really necessary.
For A/R-
If you wish to adjust your balances up (you are owed more money) then you would go to Enter A/R Invoices and either enter additional charges to an existing invoice or create a new invoice. If you use an existing invoice it will append to that invoice.
If you wish to adjust your balances down (you are owed less money) then you would adjust one or more invoices down. Using the A/R credit memo is the best way to do this since you can adjust it down for any amount up to its balance.
If the adjustment is for something like an overpayment (you have been paid more than you are owed and don’t have an outstanding invoice to match it against) you can enter a negative invoice. This will show in your outstanding invoices list when doing receipts and can be selected along with other invoices to reduce the amount owed.
Scenario 2 - A balance exists in an A/R or A/P type account that needs to be moved to another A/R or A/R account.
This situation is usually caused by invoices being coded to the wrong A/P or A/R account.
The solution for this is to get a list of the outstanding invoices that make up the balance. Then you will either reverse or do a Credit Memo to these invoices to bring them to a zero balance in the original account.
Then you will re-enter the invoice coding to the correct A/P or A/R account. This will establish the balance in that account.
Question: - Can I just do 1 transaction and reduce the one account and increase the other account rather than do two separate transactions?
Answer- It is strongly recommended that you do the transaction to liquidate the balance and then another to enter it. If you attempt to shortcut this you often get unexpected balances on your reports and it can make trying to track transactions difficult unless you remembered that you have done this and to look in the other AP/AR account.
Scenario 3- A balance exists in another account that needs to be move to an A/P or A/R type account.
Since you cannot do a JV to an A/P or A/R type account the entry will have to be done via an A/P or A/R invoice. You will be reclassifying the entry from the other account to the A/P or A/R account with an invoice number.
Typical entries will look like this:
For A/P
Let’s say that you entered a bill to your Expense and AP Other (liability) account.
The initial entry would have looked like this:
Account Debit Credit
Expense x
Other Liability x
Therefore the reclassifying entry would look like this:
Account Debit Credit
Other Liability x
A/P x
For A/R
Let’s say that you entered your Charges to Revenue and an AR Other (asset) account. The initial entry would have looked like this:
Account Debit Credit
Revenue x
Other Asset x
Therefore the reclassifying entry would like this:
Account Debit Credit
Other Asset x
A/R x
Scenario 4 - A balance exists in an A/P or A/R account that needs to be move to another type of account.
In this scenario you would need to do a Credit Memo to reduce the invoice balance to zero. This transaction will need to hit the A/P or A/R account and then the other account you are trying to move the balance into.
For A/P moving the balance from A/P to an Other Asset Account would look like this:
Account Debit Credit
A/P X
Other Asset X
For A/R moving the balance from an A/R to an Other Liability Account would look like this:
Account Debit Credit
A/R x
Other Asset x
1- A balance exists in an A/R or A/P type account that needs to be adjusted up or down.
2- A balance exists in an A/R or A/P type account that needs to be moved to another A/R or A/R account.
3- A balance exists in another account that needs to be move to an A/P or A/R type account.
4- A balance exists in an A/P or A/R account that needs to be move to another type of account.
You cannot enter a JV or other summary type transaction to an A/P or A/R type account. This is a rule in the system.
The reason for this is that entries into A/P or A/R have to have a vendor/customer and an invoice number associated with it. This is so that accurate balances can be maintained in both the GL, the sub ledger and vendor/customer balances.
If you think about it, a balance in AP (or AR) represents money that is owed to or due from a specific person and was associated with a specific invoice. Therefore if the balance changes then the amount you owe or receive from someone changes as well.
Scenario 1 - A balance exists in an A/R or A/P type account that needs to be adjusted up or down.
Many times the request for this adjustment comes from an auditor who wants a balance adjusted up or down by some amount. It is possible to adjust balances but this adjustment will need to be done against an invoice.
For A/P –
If you balance is being adjusted down then you will need to decide which invoices need to be adjusted for what amount. The best transaction source to use is the AP Credit Memo. This will allow you adjust any outstanding invoice for any amount up to its balance (reducing it).
If the adjustment is for something like an overpayment (you paid more than you owe and don’t have an outstanding invoice to match it against) you can enter a negative invoice. This will show in your select A/P Invoice to pay list and can be selected along with other invoices to reduce the amount owed.
If the balance is being adjusted up (you own more money) then you can either enter additional charges to an existing invoice (enter an API using the same vendor/invoice combination to adjust it upward) or you can enter a new invoice. In all cases you will need to specify the vendor and invoice number these go against.
Question – What if I don’t know what invoices to tie the adjustment to?
Answer – You will need to research and decide what invoices need to be adjusted or not do the adjustment.
Question – What if there are no outstanding invoices to tie the adjustment to?
Answer – Adjustments must have invoices to associate with. If all invoices are liquidated then you will need to make a new invoice outstanding or an adjustment to an existing invoice to make it outstanding via API entry. You should probably reconsider if these adjustments are really necessary.
For A/R-
If you wish to adjust your balances up (you are owed more money) then you would go to Enter A/R Invoices and either enter additional charges to an existing invoice or create a new invoice. If you use an existing invoice it will append to that invoice.
If you wish to adjust your balances down (you are owed less money) then you would adjust one or more invoices down. Using the A/R credit memo is the best way to do this since you can adjust it down for any amount up to its balance.
If the adjustment is for something like an overpayment (you have been paid more than you are owed and don’t have an outstanding invoice to match it against) you can enter a negative invoice. This will show in your outstanding invoices list when doing receipts and can be selected along with other invoices to reduce the amount owed.
Scenario 2 - A balance exists in an A/R or A/P type account that needs to be moved to another A/R or A/R account.
This situation is usually caused by invoices being coded to the wrong A/P or A/R account.
The solution for this is to get a list of the outstanding invoices that make up the balance. Then you will either reverse or do a Credit Memo to these invoices to bring them to a zero balance in the original account.
Then you will re-enter the invoice coding to the correct A/P or A/R account. This will establish the balance in that account.
Question: - Can I just do 1 transaction and reduce the one account and increase the other account rather than do two separate transactions?
Answer- It is strongly recommended that you do the transaction to liquidate the balance and then another to enter it. If you attempt to shortcut this you often get unexpected balances on your reports and it can make trying to track transactions difficult unless you remembered that you have done this and to look in the other AP/AR account.
Scenario 3- A balance exists in another account that needs to be move to an A/P or A/R type account.
Since you cannot do a JV to an A/P or A/R type account the entry will have to be done via an A/P or A/R invoice. You will be reclassifying the entry from the other account to the A/P or A/R account with an invoice number.
Typical entries will look like this:
For A/P
Let’s say that you entered a bill to your Expense and AP Other (liability) account.
The initial entry would have looked like this:
Account Debit Credit
Expense x
Other Liability x
Therefore the reclassifying entry would look like this:
Account Debit Credit
Other Liability x
A/P x
For A/R
Let’s say that you entered your Charges to Revenue and an AR Other (asset) account. The initial entry would have looked like this:
Account Debit Credit
Revenue x
Other Asset x
Therefore the reclassifying entry would like this:
Account Debit Credit
Other Asset x
A/R x
Scenario 4 - A balance exists in an A/P or A/R account that needs to be move to another type of account.
In this scenario you would need to do a Credit Memo to reduce the invoice balance to zero. This transaction will need to hit the A/P or A/R account and then the other account you are trying to move the balance into.
For A/P moving the balance from A/P to an Other Asset Account would look like this:
Account Debit Credit
A/P X
Other Asset X
For A/R moving the balance from an A/R to an Other Liability Account would look like this:
Account Debit Credit
A/R x
Other Asset x