Once the reversing entry is made, you can simply record the payment entry just like any other payment entry. QuickBooks reverses the general journal entry by entering a transaction in the next accounting month with the debits and credits flip-flopped. Resolve AR or AP on the cash basis Balance Sheet with - QuickBooks Go to the second line and in the Account column, select. Since the expense account had a negative balance of $250 in it from our reversing entry, the $500 payment entry will bring the balance up to positive $250 in other words, the half of the wages that were incurred in January. With QuickBooks Online Advanced You Can Skip . Dummies helps everyone be more knowledgeable and confident in applying what they know. This sum is then transferred to more permanent accounts, while the revenue and expense accounts are cleared for usage in the next period. QuickBooks Online - Find Pricing Discover Total Cost - QuickBooks Online As you can see from theT-Accountsabove, both accounting method result in the same balances. The liability must be reduced to the extent of the payment by cash or the transfer of other assets. Reversing certain adjusting entries is one method used to eliminate some of the difficulties created using the matching principle. The key indicator of this problem will be an accrued liability of $20,000 that the accounting staff should locate if it is periodically examining the contents of the company's liability accounts. Alan Li started writing in 2008 and has seen his work published in newsletters written for the Cecil Street Community Centre in Toronto. What are the circumstances under which accounts payable balances may be written off or reversed? The following sections provide information about finding and addressing unapplied payments. Accounts Payable Clerk (part-time) - salary.com QuickBooks Online "Categories" (Chart of Accounts) If I'm on Disability, Can I Still Get a Loan? Why are there A/R and A/P Balances in a Cash Basis Balance Sheet? Ask questions, get answers, and join our large community of QuickBooks users. 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Stephen L. Nelson, CPA, MBA, is a Certified Public Accountant in Redmond, Washington where he provides accounting, business advisory and tax planning and preparation services to small businesses.