MBE QuickBooks Tips
Reviewing your accounts receivable and accounts payable aging reports periodically is important in order to keep your QuickBooks clean and accurate.
To view the detailed reports, including vendor name, transaction amount, and number of days since entry, follow the steps below.
For accounts payable: Reports > Vendors/Payables > A/P Aging Detail
For accounts receivable: Reports > Customers/Receivables > A/R Aging Detail
The areas of concern for most users is A/R or A/P items that are more than 1 year old and vendors showing zero balances in the A/R aging.
A zero balance is commonly due to an unapplied payment, credit, or journal entry. To remove the zero balance vendor, move to the customers’ tab then select receive payments. Locate the correct vendor by typing in the name box. Any unapplied items for the vendor will show in the box “Available Credits” to the lower left of the screen. To apply the credit to the open invoice, use the discounts and credits option button at the top. Once saved and closed the vendor and the zero balance will be removed from the listing. This must be done for each individual vendor showing a zero balance.
Aged Accounts Payable Items
If you have an outstanding vendor credit, we recommend creating a bill for the vendor in the exact amount of the credit. Then in the “Pay Bills” screen, mark the bill to pay and apply the credit to the bill. This will clear out both the bill and the vendor credit from your aging report.
Aged Accounts Receivable Items
Customer invoices more than one-year-old should be reviewed for collectability. If an account is considered uncollectible, we recommend using a bad debt expense account to remove the balance. You may also use a discount item if you are familiar with discounts.
Using a bad debt expense account allows all items to be traced in one account. The steps to add a bad debt account and then remove an item this way are below.
Create an account for Bad Debt Expense (if needed):
- In the Chart of Accounts window, right-click anywhere and select New.
- Select the Expense button then click
- Assign the appropriate account number and in the Account Name field, type Bad Debt.
- Click Save & Close.
To remove the item:
- From the Customers menu, select “Receive Payments”
- Enter/select the customer
- Leave the amount field at $0.00
- Mark the invoice that needs to be written off
- In the upper right menu bar select Discount & Credits
- On the Discount tab, enter the discount amount and in the Discount Account drop-down, choose the bad debt expense account and click Done
- Click Save & Close to record the payment/discount
If you have additional questions about reviewing accounts payable and accounts receivable aged transactions, contact our QuickBooks Pro Advisor team. Or, if you would like to read through our other QuickBooks blog posts, visit: https://www.mbecpa.com/category/quickbooks/