QuickBooks Asia

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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Why can't I enter the opening balances in QuickBooks of a customer which I had created previously?

Once your account or name list such as customer or supplier name had a transaction, you will not be able to enter the opening balances from the account or any name list profile window.

The only way to enter the opening balance is via a Make General Journal Entries or a transaction such as Invoice or Bill.

When you created transactions with an account or name, the Opening Balance field in the profile window will be closed. Hence, you cannot enter the opening balances by editing the account or name.

As for the item list, the opening balance field will be closed once the item name is being saved. The only way to enter the opening balances for the item is to enter via “Adjust Qty/Value on Hand” feature.

If you are not sure in General Journal (double entry), I suggest you prepare your opening balances before you start your company file.

I will try to create a new company file check list in my future blog. Do come back to my blog for an update.