 QuickBooks Online 2022 Reversing entry, accounts receivable or sales. Get ready because it's go time with QuickBooks Online 2022. Here we are in the Get Great Guitars file we set up with a 30-day free trial. Holding down control, scrolling up a bit to get to the 125% currently in the homepage. Otherwise known as the Get Things Done page. If you wanted to change to the accounting view, it's something you can do by going to the cog up top. Switch to the accounting view down below. We will be toggling back and forth between the two views. Either here or by jumping over to the sample company file currently and the accounting view. Let's open up a few tabs and they get great guitar so that we can put reports in them. We're going to do so by right clicking on the tab up top. Duplicate the tab back to the tab to the left. Right click on it again and duplicate it again. Back to the tab to the left. Right clicking again and duplicating another time. As that is thinking, let's see where the reports are located in the accounting view. Going over to the accounting view, they're right here in the reports. That's where their home is. That's where they live. That's where the reports live. And then if we go back to the business view, second tab, we're in the business overview section. To reports and that's where the reports reside. We're going to close up the hamburger up top. We're going to then open up the balance sheet. Let's open up the big balance sheet. And do the changing of the ranging up top from 010122 to 0228. That being our cut off date, 0228 that is. Let's go to the tab to the right and we're going to go to the business overview again. This time, of course, in the reports, hamburger closed, the profit and loss, the profit and the loss, the income statement, running it for the range of 010122 to 022822. And run it. Tab to the right. Let's go to the business overview this time. In the reports closed in the hamburger, we're going to type in this time searching for the trustee trial balance. The trustee TB, we should put it in our favorites, but it should be a favorite. I think I just type it in there though. I'm going to put it up top and say this is from 010122 to 022822. That being our cut off date and run it. So there we have our trial balance. Now last time we did an adjusting entry. We're imagining a situation where we had an invoice that was entered after the cutoff date. The cutoff date being February 28 in this case, the end of February. But for which the work was done before the cutoff date and therefore in the accrual basis method, we should have recorded the revenue in the timeframe it was done. That being before the cutoff date, even though the invoice wasn't entered until after. So if I go to the first tab, for example, you'll recall, if I hit the drop down, that the invoice will typically be entered into the system when the work is done. It's the report that is closest to the point in time that the work is done, even if it's done on an accrual basis, even if we're not getting the cash at the same point in time, that we are creating the sale. But that doesn't mean that it's actually the point in time that we did the work per se. It's easiest to see that when you're thinking about a job cost type of system, in which case you'd have to count up the hours before you bill someone or issue the invoice. And so it's quite possible that the invoice is written after the point in time or after the cutoff date when the work was done before the cutoff date. That's what we're going to imagine here. Now we did it with inventory as well, because I think it's a little bit less easy to visualize how that would happen with the inventory. But because the inventory is a more complex transaction and we still have the same cutoff principles that we want to adhere to, we did the invoice to do kind of like the more complex scenario. So let's take a look what the actual invoice was. So let's do a quick recap going to the second tab, which is our balance sheet. Now there was an invoice that was entered in March, I believe March 5th, that we brought back into the current time period by doing an adjusting entry with a journal entry type of format. So let's take a look at the accounts that were impacted. Now remember this is as of the cutoff date, but when I drill down onto the information I'm going to extend the date range so we can see both the current item that we entered as well as the original invoice that was entered and after the cutoff date on March 5th. So let's go down and say we're going to go into the A to the R, the accounts receivable scroll down a bit. And if I scroll down to the bottom, I can see this is going to be the adjusting entry we put into place right there for the 525. Now if I increase the range up top, and let's say I bring this out through March 030522 and we'll say 033122 the whole month even though there's no activity in it in essence except for that transaction. So here's the actual invoice. So we've got the 525 here. It's been entered twice at this point in time. So we needed to enter it again up here so that we have it in place before the cutoff date. But we also have it in here on March 3rd. So as of March 3rd, we will have it input twice if we don't do something about it. We're not going to delete this one. We're not going to change the date of the original invoice, but instead we're going to enter a reversing entry, a reversing entry as of the first day of March. Not on March 5th, which you might say why don't I put it on March 5th? Because that's when the invoice took place and that's when it will net out at that point in time. You're going to have five days in other words or four days of weirdness, of something not looking quite right. And that's true because our objective here is not to have everything correct in the middle of the month, in the middle of the time period. It's to basically know exactly where the cutoffs are and make things correct as of the cutoff. 228, reverse them all right after the cutoff. 3-1 in this case so that we know where all the reversing entries are. We're going to sacrifice the fact that we're not going to be on a perfect or cruel basis in the middle of the month in order to have a more efficient kind of method. So we know exactly what is going on during the accrual and reversing process, the adjusting and reversing process. Okay, so going back to the balance sheet, the other side's on the income statement of course, the income statement. So if I go into that, I'm going to scroll in a bit and we go into like the sale of the product because we sold product here on this one. I'm going to scroll down now and we've got that one, journal entry. If I increase the date range to 030522 030522 and scroll down we're going to say, okay, same thing here. There it is. The original invoice was entered after the cutoff date. We brought it before the cutoff date with a journal entry, not an invoice to show that it was an adjusting entry but as of the original invoice after the cutoff date, it will have been entered twice. So we'll reverse that. That's what we're doing now. And now we're going to go to the balance sheet again. The difference between the two is the sales tax. So the sales tax is a liability when we create an invoice. So the liability account is under the California department of tax and admissions. So this is where the original one was. We made a sub account for a sales tax here to do our adjusting entry which came out to $25 so that we didn't mess up the original item here. As well, same kind of scenario even though it's in another account. We're going to reverse that first day after the cutoff march first so that it won't be in there twice. And then we've got the inventory. The inventory also went down. You'll recall if I go into the inventory we're going to say that we entered adjusting entry decreasing the inventory if I go down to it there's our adjusting entry there. If I then increase the date to 030522 and run it then we've got that in there two times as of three five. So we're going to reverse that. That's what we're going to do. We're going to fix that going back on over. We're just noting all the problems right now. There's a lot of problems that we caused and if we go back to the tap to the right the other side of that is in the cost of the goods that are sold on the profit and loss or income statement. So we're going to go down and we're going to say there is the adjustment if I was to change the date up top to 0305 030522 so I can 030522 and run it then we've got the same scenario here so now it's in there again and we've got the two transactions. Is that all the problems we have? Is that all we have to worry about? No, not quite because there's also a sub ledger anytime we deal with accounts receivable back to the balance sheet by the way anytime we deal with accounts receivable we also have to deal with the fact that there's a sub ledger because we have to apply a customer to it and there's also a sub ledger for inventory we don't want to mess those up we don't want to mess those up let's open up the reports for them by right clicking on the tab to the right duplicating it let's go back to the tab to the left sub reports I'm going to pull the one to the right that's been thinking longer to the left so that it see how it refreshes a little faster so I can go in here and I saved like probably a full three seconds right there by doing that little maneuver I'm going to close up the hamburger and then I'm going to go down I'm going to hold controls get down to that 125 we're looking for the who owes you stuff section and then we want to go into the customer balance detail the customer balance detail that's what we want that's the one and then I'm going to make this as of the cutoff date custom cutoff date which is going to be 022822 run it so there we have it so the AR notice the original invoice by the way was for Mr. Anderson so in other words 0203.0522 I mean that's what I meant to say then Mr. Anderson has this invoice that was entered that's the one we pulled back at the 525 with the adjusting entry but we didn't do the adjusting entry to Mr. Anderson QuickBooks forced us to use a customer because QuickBooks is going to try to say I'm not going to allow you to be out of balance for the most part by forcing you to use a customer even when you have a journal entry but so that means we didn't want to put it to Mr. Anderson because that's going to mess up the so we made up this other customer down below called ZZ adjusting entry and that's where we put the adjusting entry down below so that it doesn't mess up the sub ledger and we can still enter the transaction to do the adjusting entry in a hope that we don't mess up the accounting department so you can see here of course it's with a journal entry because we can't connect the journal entry to a payment as easily it's going to mess stuff up that's why we want to at least put it down here into its own account or possibly make a whole other accounts receivable account that's not under an accounts receivable type of account so we don't have to deal with the sub ledger issue so then we've got the so let's change the date up back up top so I can check my total 022822 the cutoff date back to the cutoff date we should tie out if I go back to the balance sheet to the balance sheet 2270150 is that what I said 2270150 that may not be what I said but that's what I should have said because that's the right one let's go to the tab to the right and let's do the same thing opening up a report this time for inventory close up the hamburger I'm just going to type in inventory and look for that inventory valuation summary that's the one we want that's highlighted in green let's do the date change up top let's make this as of 022822 run it so there we have it now note that this one should be out of balance if we pull out the trustee calculator here we can calculate how much it's out of balance by we should be able to do it in our head but we're all addicted to like Excel and calculators so I don't do calculations in my head that's what the robots are for I'm going to go back to the first tab and we got the inventory minus the 4346 and that's going to be a $400 difference where did the whole $400 difference come from we did an adjusting entry and unlike the accounts receivable they do not force us even if we're using QuickBooks that is even if we're using a inventory tracking system on a perpetual method they don't force us to have an inventory item much more easy therefore to have the inventory be off track or out of balance then or from the sub report so you got to be careful about that but it's also kind of a benefit in this case because I don't have to deal with adding the inventory with the adjusting entry and messing up the whole inventory process when I try to do the adjusting entry okay finally we're going to do the reversing entry can you finally get to the point of this thing I'll get to the point it's a sharp point I don't want anyone to get injured so if I go down here I'm going to open up the journal entry now we're just going to reverse the journal entry so if I go into this journal entry we're going to go into it all I'm going to do is copy the journal entry and then reverse it so here it is so I'm going to do my screenshot copy so here's the screenshot copy I'm just going to take that journal entry I'm going to put it into a word another place you want to put it now we're going to put it into word word so I'm going to go up so then I'm going to paste it now note you can also like if you don't have that screen clipping thing you could copy and paste it by doing the insert and then there's a screen clipping button and word that allows you to clip the screen or just copy the screen this way it's just if you have some copying options okay so that's what we got so what the journal entry is this is the journal entry behind an invoice debit accounts receivable we had to apply the name over here the customer or they wouldn't let us record it the sales of the product and then the California department of tax and so on and then but this I think we put into this is the sub account here I should have made that a little bit longer so you could see it cost of goods sold and inventory so if I go back on over here this is the product of this sales tax is way over here so we put it into sales tax payable a sub account of that whole bureaucratic California name okay so now let's close this out and make a new one a new one is what we want I'm going to go back to my report because I don't want to do it in this tab this isn't my working tab this is my balance sheet tab I'm going to go back to the tab to the left this is where I record stuff this is the recording tab we're going to enter the inventory now in that journal entry I'm just going to reverse it exactly now note you might be saying hey do not I need to put like the sales on top in the accounts receivable on the bottom to the debits on the top you do not because that's harder don't do that just do the same thing and reverse and reverse the debits and credits is unhappy, happy, or an attempt. So 01, this is gonna be 03, 01, 22. And so we're gonna start off with accounts receivable, accounts receivable, and I'm in the business view, so it's gonna drive me a little crazy, because I'm got these, but I don't think I need to add any new accounts. So I think I can handle it. I can handle it, even though I can't see like the account type on the right hand side. Why? Why wouldn't they show me that in the business view? It's necessary. 525, it's gonna be on the credit side, 525. I'm gonna call this a reversing entry. So we know that that's part of the reversing entry process. You might want more memo than that, but that's the minimum memo that you want. And so then I'm gonna say that this is gonna be for the ZZZ, ZZZ customer. You're saying, hey, that's not the customer for the original invoice. That's what she might be saying. And if you were, you'd be right because it was Mr. Anderson, the original invoice, but I don't wanna mess up Mr. Anderson's detail and I can't not put something in there because QuickBooks makes me. So then the other side is gonna be the sales of product. So this is gonna be sales of product, product, sales of product. So way down here, there they got it, okay? And that's going to be then a debit, but a 500. I'm just reversing this thing. You know, you see what I'm doing. I don't need to say that. We're gonna go on over here and then this is gonna be the sales tax, but it's gonna be the sub-account sales tax, sales tax payable. Where is it? Sales tax, sales tax, sales tax. Tax payable. You don't see that one, QuickBooks? Okay, I noticed that if I type in the parent account, California Department of so on, there's the sales tax. It gives me the sales tax. And again, that search on the business view is not as good in my opinion as the accounting view. Someone needs to fix it. Into it, into it is not listening to me. They never listen, whatever. You need to fix that. You need to, it's not good. So this is cost, but it's good in the other view though, in the accounting view. Hopefully they get this one fixed because I seriously feel like, okay, just record the transaction. No one cares. Here we go. The other side's gonna be inventory, inventory. So see, I mean, how is it that inventory doesn't, and did I spell it wrong? There we go, inventory asset. Now I'm just being picky at it. It's doing a good job. It's doing a good job. So there it is. Now note, as we look at this, we needed this adjusting entry here. I mean, we needed the customer here or it won't let us record it. We created another account sub-account so we didn't mess up the sales tax one. And then we've got the inventory, which we didn't need to apply a sub-account and should put us back in balance as of 31 for our sub ledgers. So let's go ahead and save it and close it and then we'll check it out. So everything looks, one more check. Does that, did I miss everything? Let me know if I missed anything. Did I miss anything? Do I have your AOK to move forward or did I do something stupid here? Okay, all right. Approval has been received, I assume. We're gonna save it and close it and then check it out. Save it and close it. Back to the balance sheet, holding down control. We're gonna go into the AR again, AR again. This is as of the cutoff date. So now I'm gonna change the date in the detail here because now I see the one adjusting entry. Let's bring it on up to 35030522, run it. So now we're gonna have then, the original one was entered after 35. We brought it back before the cutoff date with the adjusting entry, the adjusting entry, which was up here, 10, right there. And then we reversed it as of 31 so that as of 35, we're back out and it's netted out. And so we were correct as of the cutoff and then we reversed it so it doesn't double up as of 35. Why didn't we enter the reversal as of 35? So it nets out on the same date because we want all our reversals on the same day, the day after the cutoff date. And that will make it the easiest to know where they're at. The other side's on the income statement. So let's go down to the income statement. And let's change the income statement by the way. Let's make this date range up to 030522. Let's make it 0303122 and then do it by month, a month by month comparison. That's way better. Why didn't you do that from the start? Now you got the Jan, Feb, Mar and Tote. So if we go then down to the sales, where are you going? Sales is at the top. So we're gonna say this is the sales of product. Let's go into that one and hold down control, scroll down a bit. And then we're gonna say then the original one was entered on 35. We pulled it back before the cutoff date 228 on 228. And then we reversed it 31 so it's not doubled up as of 35. See? And then I'm gonna go back up top and I'm gonna go back to our profit and loss and then back to the balance sheet over here. And can't we do that balance sheet thing? We could do the range thing on the balance sheet. Let's do that 01 to 033122. Why don't I do it that month by month thing here and run that? That's way better, isn't it? Why didn't we do that before? That's way better. So let's go down and say now we're gonna be down here in the California, this is where the original was and then we did our adjusting and reversing entries in the subcategory. So we didn't mess up the California department and so on and so forth one because that's the one where the sales tax widget is tied to. So the original invoice was in here in March. So this was entered after the cutoff date, three different items for it because it's California sales tax and there's three different people you gotta pay for three different government entities and so on and so on. But we put the adjusting entry into one account here on the sales tax payable and then we reversed it, bringing it back down to zero on March. So it's not in there twice at that point in time. And then we had the inventory that is going down, inventory is up top. So if we go into the inventory, the original invoice would be over here and we're gonna say, there's the original invoice that was put into place. We reversed it on three one. We reversed it right there and the adjusting entry to bring it back before the cutoff would be in February. So that would be here. The February brought it before the cutoff and so I'll scroll down. That's the adjusting entry number 10. All right, one more item on that. That's the cost of goods sold. Then we'll go to the sub ledgers going back to the second tab. The cost of the goods that are sold would be right here and we can go in, let's go into the total for this one for the cost of the goods that are so old and scrolling down. We've got then the original one was entered after the cutoff here with the invoice. We brought it back before the cutoff which was 228, the cutoff date. And then we reversed it on three one going back then to the income statement. You can see that here because we entered it before the cutoff date and then the two net out the reversing entry and the actual invoice net out in March. So you could see that there that way as well. Let's go back to the first tab. Now, if we look at the sub ledger stuff for the accounts receivable did I mess up the sub ledger for the accounts receivable? Let's look at the AR report over here and let's check it out. And so I'm gonna refresh it. Let's run it, run it. I was running and then scroll down. And so then if I'm in ZZ down here we've got the adjusting entry as of 228. Let's bring it on up to three five now. So I'm gonna bring it on up to 030522, run it, scroll it back down. And so now I can see if I scroll it down here the ZZ it nets each other out. Now again, you got kind of an issue because it nets each other out but we don't have that same kind of tying or connection between these two transactions as we do with an invoice and a payment. In other words, if this was an invoice and a payment it would net out to zero wouldn't even show on this report because it's only showing the invoices currently. So it's gonna show this detail which is kind of annoying but it's at the bottom of the report. So hopefully it's not gonna mess people up too much and if we want to avoid it completely we can make another accounts receivable account that's not an accounts receivable type of account but rather an other current asset account so you don't have to mess this up at all. That's another method that you can use. So then I can go back up top and Mr. Anderson up top isn't messed up at all so that looks good. And as of of course the end process the end date three five that 223070150 should tie out or let's make the end date as of 033122 just to make sure I've got the whole month of March and now we've got the 2270150. If I go back to the balance sheet for March 2270150 ties out so we're in balance there. Let's look at the inventory sub ledge. Remember we were out of balance here for the, let's run it again for February because we've got the 4746. If I go back to the balance sheet then we've got the 4346 but if I then bring this up to 030522 or let's do it as of 033122 and run it if I do that then we're at the 4346 and if I go back to the balance sheet we're at the 4346 we're back in balance which is great because I was worried but now we're okay. Everything is okay. Everything is right with the world again. So breathe easy. So there is that. Now if we go back to the first tab just to take a look at some other details with the accounting department because remember we're trying to be, we're trying not to mess up the accounting process with the adjusting entries. So if I get into the get paid and paid area and that would be by the way if you were in the accounting view it would be under the sales area. If you go into there and then you go into the customers and I go into the Mr. Anderson stuff I don't have anything in here because I didn't with regards to my adjusting entries it doesn't mess up where they would normally go we would normally go in the normal accounting process to try to collect on information or give information to a customer. We're not gonna be like, oh what is this journal entry in your thing here? And then we do have this other customer down here though that does have that information in it. Hopefully again it's out of the way if you go into it then you've got the adjusting and reversing entry down there and it's kind of funny looking, right? So again, if you wanted to avoid that you could simply not use an accounts receivable account but make an accounts receivable two type of account which is a non accounts receivable type but rather another current asset type of account. So you got a couple methods you can use. Let's go back on over to the trial balance and see where we stand as of this point in time. Let's bring, this is as of 228, that's the same. Let's make the reversing entries as of 03, 03, let's make it do it this way. 01, 02, 02 to 03, 31, 02, and there we have it. So we could see this is where we stand as of March 31st, the month after the cutoff date. So you can kind of check that reversing entry if your numbers match up, that's great. I won't open up the journal report this time because we're running kind of long here. So we'll do that of course at the end of the section and so we can take a look at any differences with that report.