How to Guide to Record an Opening Balance In QuickBooks

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The Opening balance is the amount of balance available in your company’s account at the beginning of the new financial year. It is the first entry in the company’s account, either when they are first starting up or during the start of a new financial year. You can find the opening balance on the credit or debit side of the ledger, depending on whether or not the company has a positive or negative balance.

Note:

  • It is best to take advice from yours accountants before you enter an opening balance. You can open the Product Information Window by pressing F1 key or click on Should I enter an opening balance? Option during the process of setting up account, customer or vendor in QuickBooks to gather information regarding the opening balances.
  • If there is no opening balance prior to the QuickBooks Start Date, you don’t need to enter an opening balance. In place of adding opening balance, you can make transactions such as Deposit for bank or funds transfer for equity accounts for adding money to the account. You can take opinion from your accountant if you have any kind of doubt.
  • If you created new company file with a start date later than the actual company then need to enter an Opening Balances through one or more GJE that make using the Balance Sheet for the last fiscal year. If you use journal entries to record opening balances then you need to keep the following points in your mind:
    • Open Balance Equityneeds to be considered as the offset account to maintain the balance in the journal entries.
    • If you record balances for the beginning of the year it may be enough to enter a balance for last year’s retained earnings3 rather than for each income, expense and cost of goods sold (COGS) account.
    • You can enter single accounts receivable or accounts payable transaction per entry so you are required to create more than one journal entries to load the balances for such accounts.
    • You must add a vendor or customer name under the Name section of journal entries to accounts payable, accounts receivable, and sales tax payable.
    • You can use the Inventory Adjustment screen in place of entering the Inventory Asset balance through a journal entry to maintain both inventory value and quantity.

Enter Opening Balance

Bank or credit card accounts

  • Open QuickBooks and go to Company > Chart of Accounts
  • Right click on the window and select New from the drop-down list
  • In the account type, select Bank or Credit Card
  • Under the Add New Account screen:
    • Fill out all the required fields.
    • Click on the Enter Opening Balance The Enter Opening Balance will be available if you haven’t entered any transaction till now and when you enter the transactions it’ll change to the Change Opening Balance option.
    • Provide the Ending Balance Ending Date from the last bank or credit card statement that you’ve received before your QuickBooks Start Date
    • Click on OK
  • Click on Save & Close

If you have outstanding transactions in the bank or credit card, you should account for them for accurate upcoming future. Once you are done with entering your opening balances, follow the below mentioned steps:

  • Take the ending balance from the previous bank statement and:
    • You need to increase the amount be any outstanding checks.
    • Reduce the amount by any outstanding deposits.
  • Provide a journal entry that debts the bank or credit card account and crediting opening balance equity.
    • Go to Company > Make General Journal Entries
    • Provide a date and enter a number for the journal entry.
    • Under the Account column, select the bank account or credit card account and in the Debit section, enter the amount calculated in the 2nd
    • Now, click on Account and select Opening Balance Equity from the drop-down list.
    • In the Credit section, enter the amount calculated in the 2nd
  • Type in the outstanding transactions by creating checks or deposits through the Opening Balance Equity as the expense/income account.
  • Reconcile the opening balance journal entry for every account using the mini reconciliation process.

Other balance sheet accounts

Be carefully while entering an opening balance for a fixed asset, equity, long term liability, other asset, other current liability account because you can mistakenly create a double accounting entry. Also, QuickBooks treats differently Accounts Receivable and Accounts Payable opening balances.

Through the Chart of Accounts

  • Go to the Company menu and click on Chart of Accounts.
  • Right click in the Chart of Accounts window and select
  • Select the appropriate Account Type.
  • In the Add New Account screen:
    • Provide information in the appropriate fields.
    • Click on the Enter Opening Balance
    • Enter the opening balance amount and the date. Enter the date before your QuickBooks start date.
    • Click on Ok.
  • Click on Save & Close.

Using a journal entry

  • Go to the Company menu and then select Make General Journal Entries.
  • Enter the date and a number for the journal entry.
  • From the Account column, choose or create the account to be entered. You may wish to enter the accounts in the order in which they appear on the balance sheet or trial balance.
  • Enter the account balance as a positive amount in the required section. The balance depends on the type of account.
  • Repeat steps 3 and 4 for each account.
  • Once you enter all the balances, make sure that the Debit and Credit sections are equal. Utilize the Opening Balance Equity account as the offset for any difference between both the sections.
  • Click on Save & Close.
  • Make substitute journal entries or other transactions for entering the balances for accounts receivable, accounts payable, sales tax payable or any other account not included on the first journal entry.
  • Make a final journal entry to allocate all the remaining balances under the opening balance equity account among other equity accounts and retained earnings as appropriate.

Through the Register

If transactions are already in the account then you have to go to the account register in order to enter the opening balance.

  • Go to the Company menu and click on Chart of Accounts.
  • Click on the account for which you wish you provide an opening balance.
  • Now, click on Edit and select Use Register
  • Complete the fields for the new transaction as follows:
    • Date: Opening balance date.
    • Number/Type: Leave this field blank.
    • Account: Select Opening Bal Equity.
    • Payment or Deposit: Provide the amount of the opening balance under the Deposit field if it is positive and Payment field if it is negative.
  • Select Record.

Customers and vendors (A/R and A/P)

For outstanding balance before your start date: If the customer or vendor has outstanding balance BEFORE your start date, use any of the following options to record the balance.

  • Option 1: In the Opening balance field, enter the outstanding balance as of date equal to your start date. If you are looking setup jobs for customers, enter opening balances for the individual jobs instead. The customer name will display the entire balance for all its jobs. Make sure that the opening balance field is available only after adding new customers/vendors.
  • Option 2: To create opening balances for customers and vendors, create an Opening Balance item and utilize it in invoices and bills. This option will help you in determining the account that you the entries to track to.
  • Option 3: Enter single invoice or bills that are not paid in place of a total balance for all customer and vendor. The unpaid transactions will result in open balances for customers and vendors, and those balances will collectively result in A/R and A/P opening balances. This option is particularly helpful if you need to keep track of individual sales or bills that make up your customer and vendor opening balances.

For transactions that occurred after your start date: If the customer or vendor transactions shows up on or AFTER the start date, you can use standard QuickBooks forms to enter the correct transactions such as:

  • Invoices and sales receipts (with sales tax, if appropriate)
  • Customer returns
  • Customer payments
  • Deposits
  • Sales tax payments
  • Vendor bills
  • Vendor credits
  • Bill payments

Technical Support For QuickBooks Software

The above mentioned steps will help you in Record Opening Balance in QuickBooks software. It is a bit complicated process and sometimes you may face some difficulties during the process. In such scenarios, you can get in touch with our technical support department through the QuickBooks Tech Support Phone Number +1-888-300-3913 toll-free.

Setting Up QuickBooks Desktop: Your Beginning Balances

I know how intimidating setting up your beginning balances can be, this step-by-step guide can help.

In order to set up your other beginning balances, you will need the following:

  • Your Balance Sheet as of the last date before the start date of your QuickBooks.
  •  Accounts Receivable ‐ A copy of each individual invoice that is outstanding as of your QuickBooks start date.
  •  Accounts Payable ‐ A copy of each bill that you owe as of your QuickBooks start date. 
  •  All Bank, Loan, and Credit Card statements that include the last day before your QuickBooks start date.

Step by Step guide:

1. If you have a Balance Sheet make sure it has been updated to match your tax return, or use the Balance Sheet from your tax return (For Corporations). Enter the beginning balances from your Accrual Based Balance Sheet (except for Accounts Receivable and Accounts Payable) as a Journal Entry on the Last day BEFORE your QuickBooks start date. For example, if your QuickBooks start date is 1/1/18, date your Journal Entry 12/31/1. Offset the balance with Owner’s Equity or Capital Stock on the Journal Entry.

2. Enter each check that did NOT clear the bank before the QuickBooks start date, using the check date in each check register. You should have used the bank account balance from your bank statement as of the last day before your QuickBooks start date – if start date is 1/1/18, use 12/31/17 balance from your bank statement. Something really important to know – Were the expenses from those outstanding checks counted as expenses in your previous system? If the expenses WERE accounted for in your previous system (and on your last tax return), enter these checks as dated as of their original date, and ADD the total of these checks back into your beginning bank balance. If the expenses from the outstanding checks WERE NOT accounted for in your previous system, be sure to date these checks AFTER your QuickBooks start date.

3. Enter each outstanding invoice into QuickBooks using the detailed item (or an item mapped to an Equity account called Beginning Balance), original invoice dates and terms.

4. Enter each outstanding accounts payable as of the original date, including the due date. You can use the original expense account or an Equity account. 

5. Verify the loan and credit card account balances match the statements.

6. Verify that the Accounts Receivable and Accounts Payable Balances match the Balance Sheet you run in QuickBooks (on an accrual basis) after entering the invoices and bills. If there is a discrepancy, make sure your detailed entries are correct.

7. Be sure you are running your Balance Sheet on an Accrual Basis. If you are comparing your Balance Sheet from another QuickBooks file, make sure you are running both reports on an Accrual Basis. If your tax return is on Cash Basis, and you are using that Balance Sheet, you will not have an Accounts Payable or Receivable on your tax return. In that case, just make sure you enter the invoices and bills that are outstanding and double check your work.

Guide to Record an Opening Balance In QuickBooks

Opening balance is basically the amount of money in a company’s account at the beginning of a new financial period or year. This is known as the first entry that is done when a company starts its processes or after a year-end. There are various steps to edit or enter the opening balance in QuickBooks Desktop. This article details the steps in entering or editing opening balance in QuickBooks Desktop. However, to save time and effort, the user can contact our QuickBooks support team via our toll-free number i.e. +1-888-300-3913.

Points to Note:

  1. It is considered a good option to contact the accounting professional always before entering the opening balance. While setting up the account, you can press F1 key or you can simply click on the link that says- ‘Should I enter an opening balance?’. In this way, you can get information about the opening balances.
  2. Also, you must not enter the opening balance, if you do not have balance prior to the QuickBooks start date.
  3. You are allowed to enter the Opening Balances using one or more GJE that you may have created from the Balance Sheet for the previous fiscal year. This can be done when you start a new company with the date later than the actual one. You should keep the following points in mind if you are using journal entries in order to record the opening balances:
    • Use Opening Balance Equity account as the offset account so that you keep the journal entries in balance.
    • When you enter balances from the beginning of the year, then you can enter balance for the previous year’s retained earnings instead of entering each income, expense and cost of goods sold.
    • Per journal entry, you can enter only one accounts payable or receivable transaction. Therefore, you need to have multiple journal entries to load the balances for these accounts.
    • Do not forget to include the name of the vendor or customer in the names column of journal entries to accounts receivable, sales tax payable and accounts payable.
    • You can choose to use the Inventory Adjustment screen instead of entering the Inventory Asset Balance through a journal entry so that you can adjust both inventory quantity and value.

Important:

  • The dates you have entered for when your company started indicate the period when you would start tracking your financial transaction in QuickBooks.
  • It is created by QuickBooks when you enter opening balance in the balance sheet account for the first time. In addition to this, when you enter the opening balances, Opening balance Equity is recorded by the QuickBooks. This is done to ensure that you receive a good balance sheet for your company.
  • These are the profits that have not been distributed among the company’s owners. QuickBooks also computes your profit or loss at the end of your fiscal year. This is done into an equity named Retained Earnings.

Enter Opening Balance in QuickBooks Desktop

Bank or credit card accounts

  • Click on Chart of Accounts from the Company menu.
  • In this window, right click and select ‘New’.
  • Then, choose the account type- Bank or Credit Card.
  • On the ‘Add New Account’ Screen:
    • Fill all the required details.
    • Click Enter Opening Balance Button. This button will only be available if you have not entered any transaction yet. As soon as you enter a transaction, the button will change to Change Opening Balance button.
    • Now, enter ending date and ending balance from your credit card statement or last bank statement.
    • Then, click OK.
  • Click ‘Save & Close’.

To ensure that all your future reconciliation is accurate, you would be required to account for all the outstanding transactions in the credit card or bank.

After Entering opening balances, follow the steps below

  • Take the ending balance from bank statement and increase the amount by any outstanding checks, and decrease the amount by outstanding deposits.
  • Enter the journal entry debiting the bank or credit card, and crediting opening balance equity.
    • Select ‘Make General Journal Entries’ from the Company menu
    • Set the date and enter a number of journal entry
    • Now, choose the bank or credit card account from the Account column and enter the amount calculated in step 2 in the Debit column.
    • In the next line, click on Account and choose ‘Opening Balance Equity’ from the drop-down.
    • Now, in the credit column, put the amount calculated.
  • Create checks and deposits by using Opening Balance Equity and enter all the outstanding transactions.
  • This will become available for reconciliation without any impact on the prior balance sheet.
  • Now, reconcile the opening balance journal entry for each account through mini reconciliation, a process to do it.

Other balance sheet accounts

While entering an opening balance for Equity, Fixed Asset, other Asset, Current Asset, and Other Current Liability, be careful as it is possible that you may create a double accounting entry. In QuickBooks, both the Accounts Payable and Accounts Receivable are considered different.

✔ Through the Chart of Accounts:

  • Click on Chart of Accounts from the Company menu
  • Right click anywhere on the window appeared and select New, in the Chart of Accounts window
  • Choose the right Account Type
  • In the Add New Account screen:
    • Fill all required details.
    • Click Enter Opening Balance button.
    • Enter amount of opening balance and the date. You can use the date before the QuickBooks start date.
    • Now, click ‘OK‘.
  • Click Save and Close.

✔ Using a Journal Entry:

  • Select ‘Make General Journal Entries’ from the Company menu.
  • Now, set the date and enter the number required for the journal entry.
  • From the Account column, select the account you want to enter.
  • You can also enter the accounts in the order in which they appear on the balance sheet or trial balance.
  • Depending on the type of account, enter the account balance as a positive amount and that too, in the right column.
  • For example:
    • Positive balances will appear in the Debit column, for Asset accounts.
    • For Liability and Equity, these positive balances appear in the Credit column.
  • Now, for each account, you shall repeat the steps 3 and 4.
  • Make sure that once all the balances have been entered, the total amount in Debit and Credit column is equal. You can use the Opening Balance Equity as the offset to check any difference noticed between the two columns.
  • Click Save and Close.
  • To enter the balance for accounts payable, accounts receivables, and sales tax payable create an additional journal entries. You can also enter any other account that is not included on the first journal entry.
  • Now, create a final journal entry in order to distribute any remaining balance in the opening balance equity account among other retained earnings and equity accounts as desired.

✔ Through the Register:

When you have transactions in the account, you are required to go to the account register so as to enter the opening balance.

  • Click on ‘Chart of Accounts’ from the Company menu.
  • Choose the account for which you wish to enter the opening balance. Then, select Use Register from the Edit drop-down list.
  • Fill the following fields for the new transaction:
    • Date of the opening balance
    • Number/Type- Leave this section blank
    • Payee- Type Opening Balance (Optional)
    • Account- Choose Opening Balance Equity
    • Payment or Deposit: In this field, enter the opening balance in the Deposit field if it is positive and in the Payment field if it is negative.
  • Click ‘Record’.

✔ Income and Expense Accounts:

  • There is no option to enter balance for income and expense accounts because the balance for these accounts comes from transactions that are entered like bills, invoices and checks.

Customers and Vendors  (A/R and A/P)

For Outstanding Balance before your start date:

If any of your customer or vendor has an outstanding balance BEFORE the commencement date, following options can be used:

Option 1: Put the outstanding balance in the Opening balance field with As of date equal to your start date. These opening balance entries will track to Uncategorized Income or Expense. You can enter opening balance for the individual jobs in case you are planning to setup jobs for customers. Moreover, the name of the customer will reflect the total balance for all the jobs. Also note that when you add new customers or vendors, the opening balance field is available only at that time.

Option 2: To create opening balances for vendors and customers, use the opening balance item that you will create anew and use the same in invoices. This will aid in determining the account you want entries to track to.

Option 3: Enter the individual unpaid bill or invoice rather than entering the total balance for each of the customers or vendors. All the unpaid transactions will result in open balances for vendors and customers. And these will ultimately result in A/R and A/P opening balances. This option will help you keep track of all the individual sales and bills that make up your vendor and customer opening balances.

For Transactions which occurred after your start date:

When you find that the transactions of the customer or the vendor have occurred on or after the start date, then you have an option to use standard QuickBooks forms so that you are able to enter the appropriate individual transactions which include:

  • Bill Payments
  • Deposits
  • Sales tax payments
  • Vendor Bills
  • Vendor Credits
  • Invoices and Sales Receipts
  • Customer payments and returns

How to Edit Opening Balance?

✔ Bank, Credit Card and other balance sheet accounts

  • Choose the Chart of Accounts from the Lists menu
  • Double click on the account that you want to edit.
  • Then, find the opening balance transaction (usually the first one) in the account register. It will also have Opening Balance Equity in the Account field.
  • If essential, also edit the date as well as amount.
  • Click on Record to save all the changes.

✔ Income or Expense Accounts

  • Select Chart of Accounts from the Lists Menu.
  • Double click on the income or expense that you wish to edit.
  • Change the date to your start date in the Account QuickReport. If you don’t know the exact start date, then you can choose ALL in the Dates drop-down.
  • After this, you can search the report for the correct transactions that are usually among the first transactions.
  • Hover the mouse pointer over a transaction and QuickZoom it. As soon as the magnifying glass appears, double click on that.
  • Do all the required changes. If changes done affect journal entry then General Journal Entry transaction requires- total debits equal total credits.
  • Then, click Ok

We hope that the above given article will aid you also resolve your query. If you are still in doubt or have more queries yet then please feel free to contact our QuickBooks Helpline Number @ +1-888-300-3913 and speak with one of our expert Intuit Certified ProAdvisors.

Also Read :: How to print Form 1099 and 1096 in QuickBooks Desktop

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