Questions about balance sheet

[DTS]

1) What is the main reason A/R would show negative? Payments not posted?
2) This company donates % of profits to charities. It's showing a negative in an equity acct. Could it be the negative net income? Why is this?

Thank you,

D

[BOB W]

1) What is the main reason A/R would show negative? Payments not posted?
2) This company donates % of profits to charities. It's showing a negative in an equity acct. Could it be the negative net income? Why is this?

Thank you,

D

Dennis, it is just BAD bookkeeping. Collected more than they billed? The prior year A/R balance was not recorded properly or taken into account?

As sales go down with the economy, bad bookkeeping will show its ugly face.

Donations at a corporate level always leaves me wondering how business minded a client is. Be sure to verify that the donations are legit.

[S T]

A/r

Payment should be posted to A/R
Then the client should be writing a check back for any charity donation and not affecting the A/R account.

I did this with a Charitable Organization that was renting a Commercial Space from us, and I insisted that they write the full amount of the Lease Payment. I recorded to A/R and then I in turn would write a check back to them for the agreed upon amount of the Charitable Donation

One the the reasons I did this was because of Rental/Lease Value and it being reported on Schedule E, and of course my deduction for the Charitable amount went on Schedule A.

It would seem that your client should do the same. Record the proper income from sales (via billing and receipts) and then record the proper amount to Charitable Contribution (via checks written).

I would guess based on your OP that your client is billing 100% but only receiving the discounted amount and it somehow it is not being reflected on the invoicing and also reflecting on the equity account.

Although, I know our clients, love creating accounting!

Sandy

[DTS]

Bob and Sandy

Thanks to both of you. The point about donations is a good one and I will check and correct. The A/R is puzzling to me and I'm not sure how they record the payment on an invoice, even though I've shown them several times. I will check this.

Thanks again,

D

[Zee]

Yesterday, I received the financial statements for a condo/boat rack I own. I'm the Treasurer. We also had a negative receivable after a very large Bad Debt expense/Allowance was created. I called the CPA and he tried to BS me with an explanation. I told him it didn't make sense, and after further review we found the problem was a large number of the receipts had been posted to Prepaid Receivables. We bill quarterly, but several people paid for the entire year. No small change here. The amount was almost $40,000. Boat Rack maintenance fees are $300 month. Since the BS presentation of a negative AR would simply create tons of questions, I had him record a temporary adjustment using a "suspense" account.

[outwest]

Because they are using Qb?

I've seen many QB files with negative AR and AP. Among the other ways it can happen: Mistype the date on the invoice to 06/02/2055 then record the payment received and deposited on 06/02/2008. You'll end up with negative AR, a check register that reconciles, and no unpaid invoices.

That was the one I tracked down this morning.

[Zee]

I've seen many QB files with negative AR and AP. Among the other ways it can happen: Mistype the date on the invoice to 06/02/2055 then record the payment received and deposited on 06/02/2008. You'll end up with negative AR, a check register that reconciles, and no unpaid invoices.

That was the one I tracked down this morning.

The CPA is also using QB. He was simply trying to blame the SW. Frankly, I told him that was BS.

[DTS]

Zee and Outwest

Knowing this client, either of your scenarios could be the cause of this. They did incur a huge bad debt this year, as well. I will take a look next week at this. At least, I now know where to look.

Thank you.

D

[Gretel]

I learned that the first thing to do looking at a QB file is to look at the "Transaction detail report" and to check the first and last date.

[DTS]

I learned that the first thing to do looking at a QB file is to look at the "Transaction detail report" and to check the first and last date.

Yes, I do this, as well, and will when I see him next week. I asked him over the phone to do this, but that was unproductive, shall I say?

D

[TAX]

Another reason could be if you had received part of the payment at the year end and you have carry forward balance of remaining amount into next year.

You should apply full payment to such invoices paid in current year and create a new invoice for the balance instead of QB carry forward balance due. (This is my observation - some one need to confirm)

[veritas]

holy scripture for Qucikbooks

all things are possible to the one who believes.