Balance Sheet out of Balance: How to Fix?

Balance Sheet out of Balance: How to Fix?

Step 1: Determine the date when the Balance Sheet goes out of balance

 

  1. Go to the Reports menu, then select Company & Financial > Balance Sheet Summary.
  2. From the upper left of the Summary Balance Sheet window, select Customize Report.
  3. Go to the Display Tab, then:
    1. Set theReport Basis to Cash.
    2. Narrow down the Report Date Range and change the columns to determine when the Balance Sheet goes out of balance.

      Year

      1. From the Dates drop-down, select All.
      2. From the Display columns by drop-down, select Year.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the year the Balance Sheet goes out of balance.
      5. Proceed to Month.

      Month

      1. In the From and Tofields, enter the year the report goes out of balance.
      2. From the Display columns by drop-down, select Month.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilitiesto find the month the Balance goes out of balance.
      5. Proceed to Week.

      Week

      1. In the From and To fields, enter the month the report goes out of balance.
      2. In Displaycolumns by drop-down, select Week.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the week the Balance Sheet goes out of balance.

      Day

      1. In the From and To fields, enter the week the report goes out of balance.
      2. In Displaycolumns by drop-down, select Day.
      3. Select OK.
      4. Compare the Total Assets and Total Liabilities to find the day the balance sheet goes out of balance.

Step 2: Find the transaction causing the issue

  1. Once you have the date/s when the Balance Sheet goes out of balance, create a Custom Transaction Detail Report to help you identify the transaction/s causing the issue.
    1. Go to the Reports menu, then select Custom Report > Transaction Detail.
    2. The Modify Report window opens automatically. If it doesn't, you can select Customize Report,then just go to the Displaytab.
    3. UnderReport Date Range, type the date your Balance Sheet went out of balance in the From and Tofields.
      Example: From = 3/14/00 To = 3/14/00.
    4. Set the Report Basis to Accrual.
    5. Under Columns, uncheck Account, Split, Clr, and Class (if Class is present), then check Amount. This makes the report easier to read.
    6. Select OK. The ending balance on this report will be the amount that is out of balance.
    7. Check the Amount column for a transaction that equals the ending balance of the report.



      Fixing the corrupted Transaction(s)

      Determine if a certain type of transaction is putting the Balance Sheet out of balance. Some of the transactions you need to look for are:

      An inventory return and discount on an invoice

      Possible ScenarioRecommended Fix
      • You sold one or more inventory items.
      • Your customer returned one or more inventory items.
      • You have a discount item.
      1. Create a new invoice for the sale and the discount.
      2. Create a credit memo for the inventory return.
      3. Link the credit memo to the invoice in Receive Payments.

      A discount entered at the customer level and applied at the job level

      Possible ScenarioRecommended Fix
      • You have a customer with several jobs. You completed all of the jobs and invoiced the customer, including all the jobs on the invoice.
      • You received a payment for the invoice, but your customer included a discount for Job A in the payment.
      • You recorded the payment against the invoice and entered the discount on the Discount/Credit tab.
      You need to re-enter the payment and split it among the jobs, then enter the discount at the job the level to match the invoice.

      A journal entry linked to a credit memo

      Possible ScenarioRecommended Fix
      You have an open Credit Memo and you entered an offsetting General Journal Entry (GJE), then linked it to the Credit Memo.
      1. Edit the Journal Entry.
      2. Move the A/R account to the source line, usually the first line of the GJE.
      3. Save the GJE and make sure it is still linked to the Credit Memo.

      A discount that offsets to a Balance Sheet account

      Possible ScenarioRecommended Fix
      You recorded a discount and used a Balance Sheet account to offset the discount.Change the discount account to an income or expense account. If you have been instructed by your accountant to use a Balance Sheet account and it is important that you use Accrual basis reporting, you can use this workaround instead:
      1. Offset the discount to an expense account.
      2. Create a journal entry moving the discount from the expense account to the balance sheet account.

      This will effectively post the discount to the Balance Sheet account while keeping your Balance Sheet in balance.

      Unconventional inventory transactions

      Possible ScenarioRecommended Fix
      • You have transactions that adversely affect inventory such as:
        • Transactions that drive your Quantity on Hand negative.
        • Transactions that change the Quantity on Hand for previously entered assemblies and cause the assemblies to be marked pending.
        • Washing Transactions with (+) and (-) units of the same item on the same price.
        • Transactions that use a damaged item, damaged customer, or damaged vendor.
      • You have negative inventory that affects your Cash Basis Balance Sheet.
      1. Correct transactions causing the Balance Sheet to be out of balance. Note that this may affect financial statements for previous periods.
      2. Start a new data file.

      If the issue started after upgrading to a new version of QuickBooks, you can:

      1. Reinstall the old version.
      2. Restore a previous backup
      3. Prepare the restored data file for upgrade.
      4. Upgrade your data file again into the new version.

      If the transaction appears to be damaged, or is causing the imbalance without being one of the types of transactions listed above, either delete and recreate the transaction or click here for other recommended troubleshooting steps.

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