Correcting an Out-of-Balance Accounts Receivable Report
If you view or print an Accounts Receivable report from Customers window (under the Reports menu) 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 invoices and credits (it is referred to as the detail balance), while the second (bottom) number is the control total for Accounts Receivable account from your General Ledger (it says Accounts Receivable next to it). These two numbers should agree.
The following are possible causes for an out-of-balance Accounts Receivable 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 Receivable report.
Cause 2: On setup, outstanding invoices prior to your Start Month were not entered or were entered incorrectly or the starting balance for Accounts Receivable did not match the total of the outstanding invoices and credits.
Cause 3: The General Ledger or transaction files were corrupted due to a system crash.
Cause 4: A current year invoice was deleted in the Customer Payments window by choosing Delete from the Edit menu.
Cause 5: An invoice was adjusted off in Customer Payments using the Accounts Receivable account as the Disc/Adj Acct.
Cause 6: A transaction entry line was incorrectly charged to Accounts Receivable in the Payables, Disbursements, Receipts, or General Journals.
Cause 7: You have imported Receipts Journal transactions that use Accounts Receivable as the Ledger Account.
Cause 8: You entered a receivable with a date in a future month, but entered the payment date as the current or past month.
You have used an invalid Cutoff Date to view or print the Accounts Receivable report (users of version 4.0 and below only).
When you open the Customers 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 Receivable ledger balance. For example, if April is your current month in MultiLedger, and you enter 2/11/02 as the Cutoff Date, the Accounts Receivable 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 Sales Journal with a date prior to your start date was entered incorrectly or the starting balance for Accounts Receivable was entered incorrectly.
Entering transactions in the Sales Journal with a date prior to your Start Period affects the detail report, but does not affect the Accounts Receivable ledger balance. The beginning balance you enter on the Account Balances window should match the total for the outstanding receivables that were entered in the Sales Journal with a date prior to your Start Period. For information on entering prior outstanding receivables, see your MultiLedger User Manual.
Solution
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- If the balance for the Accounts Receivable ledger account is incorrect and the Accounts Receivable detail is correct, you should modify the starting balance to be correct for Accounts Receivable using the Account Balances window. For details, see your MultiLedger User Manual.
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- If the balance for the Accounts Receivable ledger account is correct and the Accounts Receivable 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 the Customer Payments window. 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 Receivable ledger account is correct and the Accounts Receivable 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 Sales 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. Choose General Ledger from the Reports menu.
2. Select the month or months that are out of balance from the list on the right.
3. Click View. (for 4.0 and earlier users, hold down the Command key while clicking view)
This rebuilds the General Ledger. For additional information, see your MultiLedger User Manual.
A current year invoice was deleted in the Customer Payments window by choosing Delete from the Edit menu.
Using the Delete command under the Edit menu to delete an outstanding Accounts Receivable transaction on the Customer Payments window removes the Accounts Receivable detail without affecting the Accounts Receivable ledger balance, causing the Accounts Receivable 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 the Customer Payments window, 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 receivable detail and you need to remove it from your Accounts Receivable ledger account:
1. Create an entry in the General Journal to reverse the original Accounts Receivable transaction.
For example, if the original Accounts Receivable transaction was entered in the Sales Journal and was a debit (+) to Accounts Receivable and a credit (-) to a sales account (in the 4000s), then your General Journal entry would be the opposite, or a credit (-) to Accounts receivable and a debit (+) to the sales account.
If you do want the entry to be included in the Accounts Receivable detail so that you can record it as being paid:
1. Re-enter the transaction in the Sales 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 Receivable detail without affecting the General Ledger balance for Accounts Receivable.
4. Record the deposit using the Customer Payments window.
You have written off an Accounts Receivable transaction using the Accounts Receivable ledger account as the Disc/Adj Acct.
Using the Accounts Receivable ledger account as the Disc/Adj Acct to discount or adjust off an entry on the Customer Payments window removes the outstanding receivable from the Accounts Receivable detail, but it also debits and credits the Accounts Receivable ledger account, causing a zero net effect to the Accounts Receivable ledger account. This causes the balance for the Accounts Receivable 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 Receipts Journal transaction.
For details, see your MultiLedger User Manual.
2. Record the adjustment correctly using the Customer Payments window.
For details, see your MultiLedger User Manual.
If the entry was made in a closed month:
You can create an entry in the General Journal that is a credit (-) to Accounts Receivable and debit (+) to a discount account, bad debt account, or a sales account.
A transaction entry line was incorrectly charged to Accounts Receivable in the Payables, Disbursements, Receipts, or General Journals.
The Accounts Receivable account as defined in the Interface Accounts window should not be used in transaction entry. If you view the Accounts Receivable account in the General Ledger listing, all transaction lines should have a Journal Source (J*) code of ‘S’ for Sales or ‘R’ for Receipts Journal. The Receipts Journal (R) entries should have been made using the Customer Payments window. A Customer Payments entry shows the customer invoice number being paid and part of the customer’s name in the description field.
If a customer payment is entered to Accounts Receivable for an outstanding customer invoice using the Receipts Journal instead of the Customer Payments window, the invoice will still appear as unpaid. This will cause the control total for Accounts Receivable in the Customer report to be a lower amount than the total of the outstanding invoices.
Note: Payments for outstanding receivables should always be recorded using the Customer Payments window.
Solution
If a transaction entered in an open month was incorrectly posted to the accounts receivable account:
1. Delete or modify the original transaction to remove or reclassify the line affecting Accounts Receivable.
For details, see your MultiLedger User Manual.
2. Record any payments involving Customer Invoices using the Customer Payments window.
For details, see your MultiLedger User Manual.
If the transaction was entered in a month that has been closed:
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 Receipts Journal was a debit (+) to your cash account and a credit (-) to your Accounts Receivable account, then your General Journal entry would be the opposite, or a credit (-) to your cash account and a debit (+) to your Accounts Receivable account.
You have imported Receipts Journal transactions that use Accounts Receivable as the Ledger Account.
Importing Receipts Journal transactions that affect the Accounts Receivable ledger account will not affect the detail report for Accounts Receivable.
Solution
Do not import Receipts Journal transactions that consist of payments for outstanding receivables. Payments for all outstanding receivables should be recorded using the Customer Payments window.
You entered a receivable with a date in a future month, but entered the payment date as the current or past month. If you want it like this, leave it, just beware that you will be out of balance until the date of the receivable.
Solution
Modify the receivable date to the same month as the payment or vice versa.