Correcting an Out-of-Balance Accounts Payable Report
If you view or print an Accounts Payable report from Vendor Reports and the two totals that appear at the bottom of the report don’t match, the reason for the out-of-balance condition should be determined and corrected.
The first total is the sum of all currently unpaid payables and credits (it is referred to as the detail balance), while the second (bottom) number is the control total for Accounts Payable account from your General Ledger (it says Accounts Payable next to it). These two numbers should agree.
The following are possible causes for an out-of-balance Accounts Payable report:
Cause 1: (only for users of version 4.0 and below) You have used an invalid Cutoff Date to view or print the Accounts Payable report.
Cause 2: On setup, outstanding payables prior to your Start Month were not entered or were entered incorrectly or the starting balance for Accounts Payable did not match the total of the outstanding payables and credits.
Cause 3: The General Ledger or transaction files were corrupted due to a system crash.
Cause 4: A current year payable was deleted in Vendor Payments by choosing Delete from the Edit menu.
Cause 5: A payable was adjusted off in Vendor Payments using the Accounts Payable account as the Disc/Adj Acct.
Cause 6: A transaction entry line was incorrectly charged to Accounts Payable in a Transaction Journal entry.
Cause 7: You have imported Payables Journal transactions that use Accounts Payable as the Ledger Account.
Cause 8: You have entered a payable in a future month, but the check was written in the current month.
You have used an invalid Cutoff Date to view or print the Accounts Payable report (users of version 4.0 and below only).
When you open the Vendor window, the Cutoff Date is automatically filled in with the current date. However, if you change the Cutoff Date to a date from a month prior to your last closed month, then the report will have an invalid Accounts Payable ledger balance. For example, if April is your current month in MultiLedger, and you enter 2/11/02 as the Cutoff Date, the Accounts Payable ledger balance will not match the detail report.
Solution
Use a Cutoff Date that is not earlier than your last closed month.
A transaction entered in the Payables Journal with a date prior to your start date was entered incorrectly or the starting balance for Accounts Payable was entered incorrectly.
Entering transactions in the Payables Journal with a date prior to your Start Period affects the detail report, but does not affect the Accounts Payable ledger balance. The beginning balance you enter on Account Balances should match the total for the outstanding payables that were entered in the Payables Journal with a date prior to your Start Period. For information on entering prior outstanding payables, see your MultiLedger User Manual.
Solution
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- If the balance for the Accounts Payable ledger account is incorrect and the Accounts Payable detail is correct, you should modify the starting balance to be correct for Accounts Payable using Account Balances. For details, see your MultiLedger User Manual.
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- If the balance for the Accounts Payable ledger account is correct and the Accounts Payable detail is overstated, you either entered more invoices than were outstanding or entered an invoice with an incorrect amount. You should delete any incorrect transaction(s) from Vendor Payments. If a transaction had been entered with an incorrect amount, re-enter it with the correct amount. For details, see your MultiLedger User Manual.
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- If the balance for the Accounts Payable ledger account is correct and the Accounts Payable detail is understated, you either didn’t enter all the invoices or entered an invoice with an incorrect amount. You should add the missing transaction(s) using the Payables Journal. If a transaction had been entered with an incorrect amount, you should delete it and re-enter with the correct amount. For details, see your MultiLedger User Manual.
The General Ledger was corrupted due to a system crash.
If the Transaction Debits and the Transaction Credits at the bottom of the General Ledger report are not in balance, the General Ledger could have been corrupted.
Note: If the Transaction Debits and the Transaction Credits at the bottom of the General Ledger report are in balance, but the Ending Balance Debits do not equal the Ending Balance Credits, that indicates that the imbalance did not occur in the selected month(s).
Solution
1. Click General Ledger in the Command Center.
2. Select the month or months that are out of balance from the list on the right.
3. (If using version 4.0 or earlier) While holding down the Command key, click View.
(If using version 5.0 or higher, just click view-no need to hold Command key.) This rebuilds the General Ledger. For additional information, see your MultiLedger User Manual.
A current year invoice was deleted in Vendor Payments by choosing Delete from the Edit menu.
Using the Delete command under the Edit menu to delete an outstanding Accounts Payable transaction in Vendor Payments removes the Accounts Payable detail without affecting the Accounts Payable ledger balance, causing the Accounts Payable ledger balance to be a higher amount than the detail report.
Tip: If you need to remove a transaction that was entered in a closed month from Vendor Payments, you can use the Disc/Adjust Acct and the Disc/Adjust edit box to write it off. For details, see your MultiLedger User Manual.
Solution
If the entry shouldn’t be included in the Accounts Payable detail and you need to remove it from your Accounts Payable ledger account:
1. Create an entry in the General Journal to reverse the original Accounts Payable transaction.
For example, if the original Accounts Payable transaction was entered in the Payables Journal and was a credit (-) to Accounts Payable and a debit (+) to an expense account (in the 6000-8000s), then your General Journal entry would be the opposite, or a debit (+) to Accounts Payable and a credit (-) to the expense account.
If you do want the entry to be included in the Accounts Payable detail so that you can record it as being paid:
1. Re-enter the transaction in the Payables Journal.
2. Hold down the Command key while clicking Save.
A message appears asking if you want to save as an outstanding item without affecting the general ledger balance.
3. Click Yes.
This returns the transaction to the Accounts Payable detail without affecting the General Ledger balance for Accounts Payable.
4. Record the deposit using Vendor Payments.
You have written off an Accounts Payable transaction using the Accounts Payable ledger account as the Disc/Adj Acct.
Using the Accounts Payable ledger account as the Disc/Adj Acct to discount or adjust off an entry in Vendor Payments removes the outstanding payable from the Accounts Payable detail, but it also debits and credits the Accounts Payable ledger account, causing a zero net effect to the Accounts Payable ledger account. This causes the balance for the Accounts Payable ledger account to be a higher amount than the detail report.
Tip: You can use the Disc/Adj Acct to write off a bad debt or reverse a transaction that was entered in a closed month. For details, see your MultiLedger User Manual.
Solutions
If the entry was made in an open month:
1. Delete the Disbursements Journal transaction.
For details, see your MultiLedger User Manual.
2. Record the adjustment correctly using Vendor Payments.
For details, see your MultiLedger User Manual.
If the entry was made in a closed month (version 4.0 and below only):
You can create an entry in the General Journal that is a debit (+) to Accounts Payable and credit (-) to a discount account or an expense account.
A transaction entry line was incorrectly charged to Accounts Payable in a Transaction Journal entry.
The Accounts Payable account as defined in Interface Accounts should not be used in transaction entry. If you view the Accounts Payable account in the General Ledger listing, all transaction lines should have a Journal Source (J*) code of ‘P’ for Payables/Item Purchases or ‘D’ for Disbursements Journal. The Disbursements Journal (D) entries should have been made using Vendor Payments. A Vendor Payments entry shows the payable document number being paid and part of the vendor’s name in the description field.
If a vendor payment is entered to Accounts Payable for an outstanding payable using the Disbursements Journal instead of Vendor Payments, the payable will still appear as unpaid. This will cause the control total for Accounts Payable in the Vendor report to be a higher amount than the total of the outstanding payables.
Note: Payments for outstanding payables should always be recorded in Vendor Payments.
Solution
If a transaction entered in an open month was incorrectly posted to the Accounts Payable account:
1. Delete or modify the original transaction to remove or reclassify the line affecting Accounts Payable.
For details, see your MultiLedger User Manual.
2. Record any payments involving Item Purchases/Payables in Vendor Payments.
For details, see your MultiLedger User Manual.
If the transaction was entered in a month that has been closed (if you have version 4 or earlier):
1. Create an entry in the General Journal to reverse or reclassify the original entry.
For example, if the entry that was recorded using the Payables Journal was a debit (+) to your cash account and a credit (-) to your Accounts Payable account, then your General Journal entry would be the opposite, or a credit (-) to your cash account and a debit (+) to your Accounts Payable account.
You have imported Disbursement Journal transactions that use Accounts Payable as the Ledger Account.
Importing Disbursement Journal transactions that affect the Accounts Payable ledger account will not affect the detail report for Accounts Payable.
Solution
Do not import Disbursement Journal transactions that consist of payments for outstanding payables. Payments for all outstanding payables should be recorded in Vendor Payments.
You have entered a payable in a future month, but the check was written in the current month. You can leave it like this, just beware that you will be out of balance until the date of the payable
Solution
Change the date of the payable to be in the same month as the disbursment or vice versa.