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  #1  
Old 05-18-2006, 05:50 PM
tonian tonian is offline
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Credit Card Opening Balances

I've read a number of posts on this but I'm not sure I get it and I'm hoping someone can straighten me out.

I'm setting up a new QB Pro 2006 company for an existing sole proprietorship. I am entering data back to the first of the year. We have business credit cards that are carrying a balance. I first set them up with the New Account function and entered beginning balances as of the last statement of last year.

Then I noticed the beginning balances show up in Accounts Payable. That's when I started searching the forum and found comments that there should be no balance in the Opening Balance Equity account either, which I have.

I also saw comments that opening balances for credit cards should be entered in the Credit Card Charges function. As a test, I deleted the opening balance entry from the register of one of the credit card accounts, deleted the payable from A/P and re-entered the opening balance in Credit Card Charges. I wasn't sure what to charge it to, I think the comments I was reading here were saying it should be charged to the Retained Earnings equity account. For this test entry, I just charged it to Other Expenses and will change that when I know better but I was askeert to go beyond the warning message when I tried to use the Retained Earnings account.

This seems to have lowered the Opening Balance Equity balance and gotten rid of the opening balance from the A/P. Am I doing this right? Sure seemed like QuickBooks wanted me to enter the Opening Balance in the New Account setup window but that doesn't seem to work right.

Thank you very much for any assistance.

Matthew
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  #2  
Old 05-18-2006, 07:40 PM
Deidre56 Deidre56 is offline
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When you create a new account in Quickbooks and use the opening balance box within the new account set-up, the offsetting balance is put to Opening Balance Equity. You can make a journal entry to reclassify the balance in Opening Balance Equity to Retained Earnings.
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  #3  
Old 05-19-2006, 12:43 AM
tonian tonian is offline
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Thank you for responding Deidre. Will this automatically take the entry out of A/P or is it OK to just delete it?

Regards,

Matthew
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  #4  
Old 05-19-2006, 03:39 AM
Joe Williams Joe Williams is offline
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The balance in AP is from entering Vendor Balances. The offset is to Uncatorized Expense which will show in Retained earnings if the date on them is before the start of the year. If you enter customers with an opening balance it is offset to Uncatorized Income and also rolls over to retained earnings. If you create a new Balance Sheet account with an opening balance that amount is offset to Opening Balance Equity.
Hope this helps you understand what QB is doing.
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  #5  
Old 05-19-2006, 12:15 PM
tonian tonian is offline
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Thank you Joe.

I'm gathering that previous posts I'd read stating there should be no balance in Opening Balance Equity does not apply to my circumstances. They must have been referring to when you are entering a new, empty account, not an existing one that has a balance.

Regarding the A/P entries, I think I understand how and why they got there now but I still don't want to have to see them every time I go to Pay Bills. I'm still not sure if I can just delete them or if it's necessary and/or proper to have all the other stuff in there, the Uncategorized Expense and Retained Earnings entries. Can I delete them?

It seems if I'm entering monthly bills made up of finance charges plus a portion of principle, the balance will go down without those opening payables. Is that right? That was kind of the way we did it before in Peachtree although I don't know what was going on with Retained Earnings and there wasn't an Uncategorized Expense account. I doubt we were doing it right then either though.

Thanks again for your time.

Matthew
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  #6  
Old 05-19-2006, 01:36 PM
tonian tonian is offline
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As I went back to work, I realised some of my vendors didn't have opening balances which I guess happened when I was pounding in the past 4-1/2 months of transactions and decided Quick Add for them was ok for now. I missed out on the whole begining balance entry opportunity so now I'm going back and hand entering them. I'm just charging them to Uncat Exp, I hope that's right too.

It also occurs to me that I had decided some of my account statements were so close to the 1st of the year I just went with them rather than using a month earlier one, like January 2nd instead of December 2nd. Now I think I'll have to go back and see where those amounts show up as they are "bills" that will accrue in this year instead of last year. I see the Uncategorized Expense account shows up in the P&L so those will have to be adjusted back to 12/31/05.

On 4/21, in the thread, "Enterering a starting balance", Joey stated, "The beginning balance in a credit card account should be entered on the Enter Credit Card Charges screen and you should charge the expenses and vendors that make up that balance. If your books are correct, you should never have any balance in the Opening Balance Equity account". That was what I was aiming at but now I don't know. In another post, he mentioned after you're done to make a journal entry to debit Retained Earnings and credit Opening Balance Equity. That sounds plausible but I don't know.

I still don't want to look at those credit card balances in A/P. Maybe I should just pay them all off. ;-)

Thanks again for listening and for any advice.

Matthew
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