x Want to participate? Join the group to interact
Options
  • State Verified Answer
  • Replies 6 replies
  • Answers 1 answer
  • Subscribers 97 subscribers
  • Views 4282 views
  • Users 0 members are here
Browse Forums
Announcements
150
topics
113
replies
General Discussion
5k
topics
13k
replies
Payroll & Tax
631
topics
887
replies
Reporting and Analytics
573
topics
1k
replies
Service Alerts
1
topics
0
replies
Software Development Kit (SDK)
435
topics
671
replies
Year End
83
topics
128
replies
harveygirl

I need help finding the cause(s) of my Accounts Receivable being out of balance.

SOLVED
Posted By

I am seeking suggestions & guidance on dealing with &/or finding the root of our A/R being out of balance.  Here's what I've done/fixed so far:

I started filling in for a bookkeeper a couple months ago while she was off work a few weeks (due to a stroke), and found that the accounts receivable was WAY out of balance.  At first it was off by a whopping approximate $294,000.00.  Through running the internal audit review, I found many entries (both sales invoices and payments received) that went to the wrong GL accounts.  (Some payments went to A/R instead of operating cash; some sales invoices went to Refunds & Allowances - 32000 instead A/R, and there may have been one or two other wrong accounts that I can't recall right now.)  

I'm at home this evening, but I know that I ran the internal audit for the last fiscal year - which was already closed, and I added up all the entries that went to the wrong GL accounts & then made adjusting journal entries to correct for those total amounts.  Then I ran it for the current fiscal year-to-date & - maybe I technically shouldn't have - went into each transaction that had an error and corrected it.  ( I realize this changes those past periods financials, but just couldn't think what else to do.)   Now I have closed the gap to only being off by approximately $3200.

I really totally believe our customer's accounts are correct, & suspect the discrepancy is other unfound entry errors to wrong GL account(s).  I looked through the GL account for A/R line by line, and nothing caught my eye as looking unusual.  Should I run the internal audit review again going back to 2 fiscal years prior, or is there really enough reason? - Couldn't I just make an adjusting journal entry moving the amount to Miscellaneous income (whether as a profit or loss?)?   Or should I actually take the time to open each line transaction for the current fiscal year on the GL for the A/R account, & make sure there are no discrepancies there?

Many thanks for any help!

  • 0
    SUGGESTED
    Was the 2016 tax return filed yet? Hope not since you are modifying the balances. :)

    Does the net income on the income statement match the net income on the balance sheet? With Sage 50, you should never post to the control accounts AR, AP and Inventory. You need to use the modules to modify these accounts. I would look at the subsidiary ledger (AR Detail), verify the balances due. If they are correct you could make adjustments. I would reconcile the balance sheet accounts and take changes to Income and expense accounts for the year in which the error occurred if the tax return was not filed.
  • 0 in reply to Best Business Strategies
    No, the tax return has not been filed - nor the fiscal year over - for the current fiscal year (4/1/16 - 3/31/17) on which I made changes to transactions.

    I'm not sure what you mean by 'never post to control accts for A/R or A/P..... (I'm guessing you mean to never make a general journal entry to any of those - but I had looked back a few years & even in some prior years the accountant had had the bookkeeper make some adjusting entries to effect/reconcile A/R).?

    And I also don't know what you mean by "you need to use the modules to modify these accts". What are and how would you use the modules to make adjustments to resolve the discrepancies instead of making adjusting journal entries? thanks
  • 0 in reply to harveygirl
    verified answer
    You're down to about 1% of the original variance. I would not look back any farther for an amount that size. If you are confident that the customer balances are correct, then make the general journal entry to force the balance in the AR account to match the total of the customer balances.

    It's good advice to not make general journal entries A/R or A/P because usually it means one of two things:
    1 - That journal entry will cause the A/R or A/P account to no longer match the aging report.
    or
    2 - It already doesn't match and you need to find out why and fix the root problem instead of just posting a journal entry to mask it.

    But in your case you've already made a reasonable effort to find and fix the problem. Going back any farther doesn't make sense.

    From this point on, keep an eye on those balances to make sure they stay in agreement. If they get off, do exactly what you did this time to find and correct the problem. If the accountant gives you a general journal entry (adjusting entry) to the A/R account don't do it. Instead make them tell you exactly what is being adjusted so you can correct the customer accounts with the appropriate A/R transactions (credit memo, bad debt write off, etc).
  • 0 in reply to StephenC
    Thank you Mr. Collins!! And yes, I have helped (&will be) that bookkeeper now with running internal acctg review before closing out the month to catch any such errors going forward to correct them within that period. Now I am going to look through the help files to try to figure out what that other person's answer was talking about to 'use the modules' to correct A/R entries. still puzzled by that.
  • 0 in reply to harveygirl
    That's kind of shorthand in the accounting software industry that simply means "anything except general ledger". Once you move up to accounting programs bigger than Sage 50, they usually have a base program (which includes general ledger) that you purchase and then add to it just the modules you need: A/R, A/P, inventory, payroll, job cost, etc. Those of us who work in the industry are so used to the terminology it's easy to forget that not everyone else is.
  • 0 in reply to StephenC
    Thanks again. Cause actually I have worked with a bigger program that had specific modules, but I was kinda confused because yeah Sage50 doesn't seem to me to have modules.

*Community Hub is the new name for Sage City