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What's the best way to clear out old accounts?

I've inherited a QB's file which has many accounts that have balances that are old with little or no records. These accounts go across all types: Assets Liabilities, Equity, etc. I've created a new QBs file for this current year, however, I need to bring the balances for those accounts from the old QBs. Thanks in advance.

Answers

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

Can you clarify what a 'QB' file is? Is this Quickbooks, or does it refer to something else. Ultimately, every entry has both debits and credits. This is a chance for you to do some real sleuthing and try to figure out what the rationale was for the various entries. Figuring out some logic can go a long way to identify how many of the entries ended up where they did.

This is also a prime example for why you should always take the time to include backup information for yourself or anyone else looking at something in the future. If you are like me, I can't remember what I ate for dinner last night much less what a unique transaction was meant to accomplish a month ago (or longer).

Anonymous
(Unemployed) |

QB = Quickbooks.

Definitely have been including backup for what I've been doing. Some of the stuff goes back quite a long time ago (2006) so it's not really worth the effort IMO to go back and figure it out. Ultimately, I want to move to a suspense account or some account that would reclass those balances but haven't encountered anything like this before.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

When we switched from desktop QBs to QBs online for our personal business, I just made a JE to bring in all the AP/AR balances. Would this work for you?

Topic Expert
Jaime Campbell
Title: Chief Financial Officer
Company: Tier One Services, LLC
(Chief Financial Officer, Tier One Services, LLC) |

How to remove these balances from the books really depends on the real-life story behind each one.

For example, if there are assets that have been sold, then you'll need to see if this sale was properly reported on their tax return. If not, best practices indicate that you should make a prior period adjustment and have the tax preparer file an amended return.

But old accounts receivable, if they are cash basis filers, can be written off against their income account. If they are accrual basis filers, old A/R can be written off against Bad Debt Expense...but check the tax return first to make sure the books align with the return (see below).

Sometimes the tax preparer makes annual adjustments to fix account balances but doesn't send these adjustments back to the client. You might be able to follow that trail to determine how to adjust account balances to 0.

Anonymous
(Unemployed) |

Quite a few are small invoices that were never paid that can likely go to bad debt expense. We also have a lot of small bills that were old an unpaid and likely will not be paid due to the vendor going out of business, etc.

Kevin Kelso
Title: Controller
Company: The Arc of Delaware
(Controller, The Arc of Delaware) |

I'm not a Quickbook user but it appears you need to process a credit memo in your Accounts Receivable module and offset bad debt expense. That should clean up the A/R aging records and the GL balance.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

I need to clarify, when I did this I made a journal entry to being over the account receivable balance and applied it to that customer, so that at the beginning of the year I could run and AR Report and each customer account showed the correct balance. I then had to do the same thing for the AP side. Of course this is only an ideal method for small business. In a large setting it would take too long. Agree with Kevin, if you are writing off an uncollected account, one method would be to create a credit memo to bad debt. You would then want to receive payments and apply the credit memo against it. I use different versions and found it's a little different depending on which version you use.

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