Yes, there are a few restrictions on making General Journal Entries to Accounts Receivable (A/R) and Accounts Payable (A/P) accounts.
Normally, the preferred way to change the balance in an A/R or A/P account is by recording transactions, such as customer invoices or vendor bills. However, sometimes it’s more convenient to make a General Journal Entry. A common use of General Journal Entries to A/R or A/P accounts is to set up customer or vendor balances in a new QuickBooks company file.
If you opt to make a General Journal Entry to an A/R or A/P account, such entries are subject to these restrictions:
- You can’t use more than 1 A/R or A/P account in a single journal entry
- You must enter a customer name for a General Journal Entry to an A/R account and a vendor name for a entry to a A/P account
Here are some of the warnings you’ll see if you attempt to violate these restrictions:
Here’s an example of a General Journal Entry to 1 A/P account that meets the restrictions:
While not an absolute requirement, QuickBooks prefers that transactions involving A/R or A/P accounts have that account on the first line of the General Journal Entry. The first line of a General Journal Entry is the source of the transaction. Sources and targets are an important concept in QuickBooks. For more information, see our article on sources and targets.
When you record a General Journal Entry to an A/R or A/P account, the General Journal Entry will appear in the transaction list for the customer or vendor specified in either the Customer Center or Vendor Center – provided that the A/R or A/P account is on the first line of the general journal entry and is therefore the transaction source. General Journal Entries that debit (increase) A/R will be similar to a customer invoice and can be paid in a similar fashion. General Journal Entries that credit (increase) A/P will be similar to a vendor bill and likewise can be paid just like other vendor bills. However, some data fields are not filled in when recording transactions for a customer or vendor via a General Journal Entry. For example, the Terms and Due Date fields on a General Journal Entry for a vendor are left blank, as shown below. (Note: The single screenshot below shows a customized Vendor Center with the separate Pay Bills window placed on top of it to illustrate several of the points discussed in this article.)
Beyond restrictions on making General Journal Entries to an A/R or A/P account, there are other restrictions that apply to making General Journal Entries, such as currency restrictions in multicurrency environments.
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I had a client that somehow get their Accounts Receivable balance per the Trial Balance to be $1,100 lower than the balance shown on the A/R aging summary. There are no accounts assigned to ‘no name’ and we cannot make an entry to A/R without a name to gross it up without affecting the aging schedule.
What can we do to fix this discrepancy?
Let say I input Journal Entry debit A/R 1,000 and credit Sales 1,000 and I got the payment, so the Journal Entry would be debit Cash 1,000 and credit A/R 1,000. My A/R would be 0. However, when I checked the A/R Aging Summary or Open Invoices, the transaction of Journal Entry still showing as General Journal 1,000
General Journal -1,000
Total 0
How can I get rid of that 1,000 trasaction from A/R Aging Summary or Open Invoices in Quickbook since the balance is 0? I know that I can just simply use an invoice and receive payment. But if you can let me know how to get rid of that 1,000 by using Journal Entry? Thanks!
To clear items from a QB report, you have to apply the payment (in this case your GJE) to the invoice (which in your case is also a GJE). QB doesn’t offer a way to do this when both are GJE’s, so you’ll have to void the transactions and re-enter them using a QB invoice and payment.
I am trying to set up a Reserve for Bad Debt account with a total of $20,000. My GJE debits Bad Expense and credits Bad Debt Reserve. As usual, it requires a customer name on the AR account. I don’t want this to show up on the customer account or my AR aging report, naturally. Is there a work-around for this? There’s no way to know which customer may not pay their bill, that’s why it’s called a reserve. I’ve never seen a software program require this.
This account might be set up as an ‘Accounts Receivable’ on your chart of accounts. Change this to ‘other current asset’. This will get rid of the vendor/member name requirement.
Hi and thanks for your clear and detailed answers to common problems in QB.
I recently had to refund a customer’s credit card and charge a different credit card of his instead. Our credit card processing company holds all transactions for 24 hours and then deposits to our bank account in batches. For this reason we created a separate account for them in QB. When a customer pays with a credit card we record it as a deposit to this account and when the processing company deposits the batch to our bank account we record a shift in assets from their account in QB to our actual bank account in QB.
When I credited the customer’s credit card, instead of immediately pulling the full amount from our bank account, the processing company first matched up any payments we received that day through them, and then pulled the rest from our bank account. As a result of this I now had to record 2 GJ entries. One was a debit to the customer’s accounts receivable and credit to the processing account for the amount that they matched up which didn’t directly come out of bank account. The second one was an identical entry for the amount of the funds that they actually pulled from our account which I credited later from the bank account to the processing fund. Since I had to record the refund by debiting the A/R account through the GJ, I can’t apply the payment the customer later made with his new credit card to any invoice. Now the new payment is kinda “hanging around” and any time I record a new invoice for this client QB informs me that there are available credits when in actuality the customer’s account is completely in balance. I need to somehow match the new payment with the debits I entered for the customer’s account through the GJ. I would appreciate any help with this.
Your terminology seems to confuse the issue. “Account” should refer to general ledger account in this context. In casual conversation, one might refer to a “customer account”, but a customer is really a name, similar to a vendor or employee. You might use a separate GL account as a clearing account for credit card transactions, but you wouldn’t want to use a separate customer name.
If Customer A buys something for $100 and pays for it with a credit card and later decides to pay for it with a different card, using the same customer name you would generate a return for $100 and refund it. Then, you’d generate a new replacement invoice that duplicates the original purchase and pay for it with the new credit card. If you do both transactions at the sane time, they both should be in the same batch from your merchant service.
Your setup of recording a “shift in assets from their account in QB to our actual bank account in QB” is probably where the problem is. If you use a clearing account to make it easier to reconcile your merchant account, the “shift in assets” isn’t customer specific, even if you can match up what you transfer to your bank account. From your customer name in QB, everything has to happen using the same customer name, and applying available credits should have nothing to do with how you move amounts between your credit card clearing account and your bank account.
That doesn’t directly answer your question, but it’s not an easy question to resolve in this format. If you’ve satisfied that you’ve collected the amounts via credit card, you might be better off voiding the transactions and re-doing them as sales on account (ie, paid by A/R). The return will wash with the new invoice, and you’ll bypass your credit card clearing account.
Hi,
Is there any way for me to put in a “Due date” for a general journal bill entry? In the above article it says that this is one of the limitations but is there a workaround for this?
Thanks
No, unfortunately, GJE’s don’t have due dates.
I am new to QuickBooks–just started this job in October. I can see in open invoices that customers owe money, but when I go to the A/R journal, I see a payment made and a zero balance. How do I fix this in the open invoices?
It’s not clear what you mean by “A/R journal”. Here are a couple of things to compare where all reports having the same date and basis (cash or accrual). Print a balance sheet, an Open Invoices report, and a Customer Balance Detail report. For the last report, if you have a lot of customers, you may opt to work with the report on-screen rather than printing it. First, the totals on the A/R reports (Open Invoices and Customer Balance Detail) should match what is shown on the balance sheet. If not, you could have a data problem.
If the totals match, the next step is to look at individual customers. Pick a customer on the Open Invoices report and review that customer’s history on the Customer Balance Detail. Repeat that for each customer but especially for the customers that you said show a zero balance. If these 2 reports don’t match for any 1 customer, you might have a data problem.
If everything matches, then it’s likely there’s a misunderstanding on what information was on the A/R journal to which you first referred. QB A/R reports include different information and the information included can change based on settings you make, so what appeared to be an error in the reports might not have been an error at all. If you complete the process described above, you’ll get a good handle on what your A/R is.
I need help with a GJE In QB – I am trying o clean up errors by others from previous years. last year someone posted a “Customer deposit” other current liability to record a deposit from a customer. when the work was complete they converted the work order to the invoice, in full, then made a credit memo to apply to that invoice so the payment received amount would match up. the bank has been reconciled and I do not want to void and re-do the work the correct way since it is a long process… but I am unsure of the right was to do a GJE to clear this up. This amount is on our balance sheet showing for other current liability but since the payment was actually received in full I need it to come out of there so this does not show on the report as monies we have..
I thought I needed to do a GJE to the A/R/ customer linked to the job deposit account, but when I did it, I did it wrong because it then gave the customer a credit..and did not clear up the job deposit account…did I miss a step, should I create another invoice to apply it to? I thought that is wrong because it will look as if we made more than we did/duplicate it… what is the right way to do this?? can i make it so it functions as a credit to the customer so i can void the other credit applied to the invoice, and apply the GJE to it? please advise if you can. Thank you in advance!
i answered my own question, after I typed this i figured it out! Thank you 🙂
When you record a GJE, if you use an A/R account, you’ll have to supply a customer name and the GJE will impact that customer’s account.
Fixing a problem like this requires that you look at a balance sheet and identify what’s wrong or inaccurate. You say the liability is wrong, but since accounting is a double entry system, you’ll need to find the other part that is wrong. Once you find that, you can enter a GJE where you reverse your liability with an offset to that other “wrong” side that your investigation uncovered.
Why is a credit balance of $172.56 showing up on a credit memo history report for a credit memo for $86.47? Also….on the bottom of that credit memo, it shows a balance on that memo for $1243!! It seems every time I unapply and reapply the credits, its totally them up as if they were never used. My A/R is showing a credit due the custome of $172.56 when this is not true. The customer center shows the customer owes this additional $172.56. On customer statement….it shows a balance due with the additional $172.56 but the aging boxes on the bottom reflect the credits being used. I am so damn confused….I think I might have to just add the customer as a new customer with a slightly different spelling of the name and start fresh. There are no credits due this customer.
It sounds like you might have some data corruption. The normal course of action is to run the Verify utility. You can also try running the Rebuild utility at least 2 times in succession. If the credit balances are still showing up incorrectly, your next step is probably to call Intuit support.
I forgot to include that I am working in Quickbooks Pro2010
Can you be more specific about what you are referring to when you refer to the “customer’s register”? If you are referring to an A/R report, QB A/R reports intentionally output different information. The customer center balance is the total balance for all transactions for all jobs for that customer. I suspect that when you deleted the GJE, the customer center balance changed. But without more information on the balance you’re comparing this to, it’s hard to point you in the right direction.
Why is the customer center balance different from the balance in the customer’s register? I made GJE for discounts not applied to previous invoices. Realizing one of the discounts I’d given them credit for had already been applied, I deleted the GJE for the one transaction. The balance in the customer’s register is now different from the customer center balance. The balance in the register is correct, but the balance in the customer center balance is not. Please help me correct this problem.
Thank You
when i would like to record GJ for defferant A/P in one transaction i receieved message that i couldnt proceed this transaction , so what can i do ?
You’ll have to provide a more detailed description of the journal entry you attempted to make and the exact text of the error message you received in order for us to provide a good response.
I have overpriced bills how can i can i create credits for them in qb
On the Enter Bills window, there is an option to enter a credit.
You can also impact A/P using a general journal entry. To do that and record a bill credit for a vendor, you’d make the first line of your general journal entry a debit to your A/P account; be sure to include the vendor name in the Name column. The second line of the general journal entry would be a credit to the expense account that was overcharged.
The first method is simpler, and that method has to be used if you want to issue a credit for items, which you’d do on the Items tab of the Enter Bills window.
I have $0.00 on the aging due to the 2 enteries on the customer account are both general journal entries. How do I merge the entries so they stop printing on my AR aging report with $0.00 and off the open balance report?
Thank you so much we have tried everything
For QB A/R, you can’t apply 1 GJE to another. That’s because for A/R (unlike A/P, which has the Pay Bills function), there is no function that can be accessed from a menu to apply one transaction to another. Therefore, you’ll have to take the GJE that debits A/R (ie, behaves like an invoice) and change that GJE to an invoice. You can set up an other charge item to post to the same account as the GJE; if you have multiple accounts in your GJE, you’ll have to create multiple items. Once you’ve created the invoice, open it and hit the Apply Credits… button. You should see your GJE that functions like a payment. Once you applied the new invoice to the credit, you can void the GJE that you replaced with the invoice.
Hope that helps.
Novice QBs user here… struggling…
What if the GJEs fall in a locked down prior year — as in 4 years earlier?
Should I replace the debit GJE with an invoice at 12/31 of the current year instead?
Will I be able to apply this against the prior period credit GJE?
If so, will I be able to void the prior period debit GJE after the “new invoice” offsets the credit GJE?
If so, how do I “void” the prior period debit GJE?
Thanks so much in advance. This has been causing me a massive year-end headache! A/R and A/P are both so messy with these offsetting GJEs!
your website is wonderful. I have a growing career as a local bookkeeper and i’ve learned lots by just browsing around. however, one thing you haven’t truly answered, though have acknowledged, is what to do when the accountants have you make a general journal entry that hits a A/R account and therefore sits waiting in the make deposits window. We tried to avoid hitting those accounts, but couldn’t. so now, everytime we go to make deposits, the general journal entries are sitting out there. is there anything i can do to get rid of them?
thank you so much! i’m hoping you will provide the answer and be my saviour!!!
It sounds like your GJE’s weren’t quite right. You can use a GJE to impact an A/R account (as this article describes) but you have to be sure to refer to a customer in the Name field. Let’s imagine you use the Undeposited Funds account and want to record a sale and a payment via a GJE. Your first GJE would be a debit to A/R and a credit to a revenue account; your second GJE would be a credit to A/R and a debit to Undeposited Funds. You’d then use the Make Deposits function to deposit that payment normally – so Make Deposits would get rid of them. Of course, there’s no need to use a GJE because it would be simpler to use a form such as an invoice or a sales receipt.
We can provide other explanations if you describe what you are trying to record. You said “accountants have you make a general journal entry….” Why? What was the purpose of the entry? We’re more interested in a description of the activity (such as, “Jane bought $100 worth of widgets on her open account….”) than a description of how you are trying to record that in QB. Ask yourself whether that activity can be recorded with an item on a form. Can you provide specifics on what entry is in your Undeposited Funds account that you can’t get rid of?
Run a balance sheet and an A/R report as of the same date. The A/R shown on the balance sheet should match the total shown on the A/R report. If it doesn’t, that means you’ve somehow recorded a transaction in the A/R account without a customer. Recent versions of QB contain checks to prevent you from doing that.