QuickBooks Balance Sheet Out Of Balance: Here’s What to Do

Accounting

Balance Sheet in QuickBooks provides a clear picture of your company’s financial status. Thus, it helps in making informed business decisions for the growth of the organization. But, at times, users might encounter QuickBooks balance sheet out-of-balance issues when the asset side doesn’t match the balance on the liabilities and equity side. This situation basically happens when either the balance of the asset or the liability side is less than the other.

Unfortunately, the discrepancies in balance sheet prevent users in determining the exact company’s status. Therefore, it is mandatory to correct the QuickBooks Desktop balance sheet out of balance issue using the corrective measures given in this post.

Points to Consider For Keeping Balance Sheet in Balance

Below, we have discussed some of the instances that might cause QuickBooks balance sheet to be out of balance issue. So, all you require is to pay more attention while dealing with these circumstances.

Inventory Return and Discount Applied on an Invoice

Make sure that the invoice contains both the sale and the discount amount. You have to create the returned inventory for the credit memo. Thereon, all you require is to link the credit memo with that to the invoice you received the payment.

Journal Entry linked to a credit memo

While linking the journal entries with the credit memos you must be more attentive. If the journal entry is creating the trouble in linking do the necessary changes within the journal entry. Also verify that the A/R is the source which must be present on the first line. Besides this, you must verify that the journal entry is still connected with the credit memo.

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Rectify QuickBooks Balance Sheet Out Of Balance Issue Smoothly

If you are also struggling with the QuickBooks Balance Sheet Out of Balance issue, then don’t panic. Instead, implement the troubleshooting steps below to overcome the issue.

First Step: Start Running the Report on Accrual Basis

If you haven’t run the report on an accrual basis, then do it by performing the steps below.

• Primarily, you must browse to the Reports menu and hit the Company & Financial tab.
• Afterwards, choose the Balance Sheet Summary tab and then pick the Customize Report menu.
• Thereon, pick the Accrual option beneath the Report Basis tab.
• After making all the changes, hit the OK tab. Then, if you notice that your balance sheet of out of balance in accrual basis, you must run the rebuild data utility. However, if it run out of balance in cash basis only or if it still goes out of balance after running rebuild data utility, try next step.

Second Step: Look for the date when your balance sheet goes out of balance

To search for the transactions that are causing the trouble, you must start looking for the date when they go out of balance.

• In the beginning, move to the Reports menu and hit the Company & Financials.
• After that, tap on Balance Sheet Summary > Customize Report tab.
• When you are on the Display tab, browse to the Dates drop-down menu list and pick the All option.
• Now, switch to the Report Basis section. If you notice that the balance sheet runs out of balance in accrual basis, pick the Accrual tab. Else, you must go with the Cash option.
• Thereon, move on to the Columns section and click on Display Column drop-down arrow to pick the Year option.
• Now, start matching the Total Assets balance with the Total Liabilities & Equity. Also, you must search when your balance sheet runs out of balance.

Once you get the year, perform the same steps to narrow down the exact date.

• You must resume all the 1-4 steps as listed above. Then, choose the Display Columns drop-down arrow to pick the Month option.
• Once you find the month, once again, implement steps 1 to 6 and hit the Week option.
• After finalizing the week, resume the same steps again and then pick the Day.
• Now, when you have the date on which the report balance goes out of balance, move to the next step.

Third Step: Locate those Transactions That Are Making Balance Sheet Out Of Balance

All you require is to run a custom transaction detail report for the date you find is causing the issue.

• To begin with, switch to the Reports menu and click the Custom Report and Transaction Detail option.
• Now, start searching for the Report Date Range Section and provide the date that the report goes out of balance.
• After this, shift to the Report Basis section. Suppose you see that your balance sheet is out of balance in accrual only; head to the accrual option. Otherwise, you can opt for the Cash option.
• Thereon, access the Columns section and leave the checkbox unmarked that says “Account, split Clr, and Class.” Then, pick the Amount option and it will make easier to read the report and hit the Paid Amount column.
• Now, go with the OK option and check that the ending balance within the Paid Amount section tallies with the amount which goes out of balance. Then, begin searching for the transactions that add up to this amount.

Fourth Step: Mention the Date On the Transactions Again

• After getting the transaction that is creating the issue, edit the dates on them. For that, you have to write down the current dates and then modify the date on each transaction to a day 20 years in the future.
• Thereon, you have to save each and every transaction after making the changes.
• Now, refresh the report if you notice the correct transactions. Also, verify that the Paid Amount column must be reflected as zero.
• Next, all you require is to search for the transactions that you dated in the future. Later on, you have to mention the date back to its original date.

If this step doesn’t help you out, then try the next step given below.

Fifth Step: Remove & Try Entering the Transactions

Even after modifying the dates of the transaction, the issue won’t be addressed. Remove and enter the transactions again.

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Advanced Troubleshooting for QuickBooks Desktop Balance sheet out of balance Issue

The users have to run the reports in QuickBooks to find out which transactions is causing balance sheet out of balance in QuickBooks issue. Then, try adding the date of 20 years in the future. If that also, doesn’t rectify the issue, then run the below given reports.

Step 1: Start Running a Customer Report

Start the process by switching to the Reports menu and then clicking Custom Reports.

• Afterwards, choose the Transaction Detail tab and it will eventually launch the Modify Report window. If it won’t then hit the Customize Report and then choose the Display tab.
• Now, when you are on the Display tab, make the necessary changes.
  • You must pick the Report Basis to Accrual.
  • Also, you have to set the From and To fields to the Day when the Balance sheet goes out of balance.
  • After that, you must set the Total by to the Customer.
• Next, you must move to the Filter tab and do the following:
  • When you are on the Filters List, you must choose the Transaction Type option.
    • You must tap on the Transaction Type drop-down arrow and pick the Multiple Transactions. Then, circle the checkbox of Invoice, Credit Memo and Payment.
      • Now, when all the necessary changes are made, hit the OK tab.
• Now, if you see that the Total is the amount that causes the balance sheet to be out of balance on this date, In that scenario, look for the Customer having the non-zero (positive or negative) sub-total. This means that the Customer is having damaged transactions.
• When you check that the Total amount is non-zero (positive or negative). Also, verify that the amount by which the balance sheet goes out of balance on this date. To fix this, all you require is to provide other transactions to the Transaction Type filter like Journal Entries and Checks.

Step 2: Start Running a Vendor Report

• In the beginning, move to the Reports menu > Custom Reports > Transaction Detail tab.
• Afterwards, it will eventually bring up the Modify Report window. If it won’t open, then pick the Customize Report tab and hit the Display tab.
• When you are on the Display Tab, do as follows:
  • You must set the Report Basis to Accrual.
    • Also, set the From and To fields for the day the Balance Sheet runs out of balance.
      • Thereon, you must set the Total By to Customer.
• Now, browse to the Filter tab.
  • From the Filters list, you must choose the Transaction Type option.
    • After this, hit the Multiple Transactions option and select the Bill, Bill Credit, and Bill Payment checkboxes.
      • When all the changes are done, hit the OK tab.
• After running the report if the Total shows the amount by which this problem occurs on this date: The users must start searching for the vendor with a non-zero (positive or negative) sub-total. It shows that this vendor contains the damaged transactions.
• If you spot the non-zero (positive or negative) and not the amount by which this issue arises on this date, In that scenario, all you require is to mention other transactions to the Transaction Type filter, like Journal Entries.

Step 3: Try Running a Journal Report

• To begin with, choose the Reports menu, then pick the Accountant and Taxes and then Journal.
• Afterwards, you must choose the Customize Report and then move to the Display tab.
• Now, you must set the Report Basis to Accrual.
• Thereon, mention the Day when the Balance Sheet goes out of Balance by clicking the From and To fields.
• Complete the process by hitting the OK tab.

Step 4: Start Running A Report For Other Transactions

• Begin the process by hitting the Reports menu, Custom Reports, and then hit the Transaction Detail tab.
• After that, it will eventually launch the Modify Report window. If the window won’t open up, pick the Customize Report option and move to the Display tab.
• Now, browse to the Display tab and perform the necessary actions.
  • You must set the Report Basis to Accrual.
    • Then, from the Dates drop-down menu list, pick the All tab.
      • Set the Total by as the Account List.
        • Go to the Columns Lists and mark Item.
• Once the changes are made, tap on the OK tab.
• Now, all you require is to scroll down to the middle of the report. Then, if you find that the last group of transactions has the heading No Account and the Account column is blank, it signifies these transaction targets don’t have any accounts allotted to them. Therefore, to address the issue, you must follow the following steps:
  • You must move to the Lists menu and then pick the Item List tab.
    • The users have to right-click on the item and then go to the Edit Item.
      • After that, switch the Account and click the OK tab.
        • All you require is to perform the i and ii steps to change the Account to the original Account. Then, hit the OK tab to save the necessary changes.
• Once again, repeat the 5th step again for every transaction that won’t have an account.

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Common Issues That Causes Balance Sheet Out of Balance QuickBooks Desktop

At times, there are some of the transactions might be the reason that causes Balance sheet out of balance QuickBooks Desktop. In that scenario, it is mandatory to search for those transactions and then address them to balance the accounts. Herein, we have discussed about few of the transactions for which you must keep a check.

Transaction 1: An inventory return and discount on an invoice

Scenario	Fixation Method
You sold one or more inventory items	The users have to generate a new invoice for the sale and the discount.
Your customer returned one or more inventory items	Prepare a credit memo for the inventory return.
You have a discount item	Start linking your credit memo to the invoice in Receive Payments.

Transaction 2: A discount entered at the customer level and applied at the job level

Scenario	Solution
You have a customer with several jobs. You completed all of the jobs and invoiced the customer including all the jobs of the invoice.
You received payment for the invoice, but your customer included a discount for Job A in the payment.	Herein, the users must provide the payment again and then distribute among the jobs and then provide the discount at the job to tally the level with the invoice.
You recorded the payment against the invoice and entered the discount on the Discount/Credit tab.

Transaction 3: A journal entry linked to a credit memo

Scenario	Solution
You have an open Credit Memo and you entered an offsetting General Journal Entry then linked it to the Credit Memo.	a. Modify the Journal Entry. b. Transfer the A/R account to the source line, which is basically the first line of the General Journal Entry.

Transaction 4: Unconventional Inventory Transactions

Scenario	Solution
You have transactions which may hamper the inventory such as: transaction that drive your Quantity on Hand Negative Transactions that change the Quantity on Hand for the existing entered assemblies and cause assemblies to be marked pending. Washing Transactions using the (+) (-) units of the similar items at the same price. Transactions which make use of the damaged items, customers and vendors.	a. Rectify the transactions that is causing the Balance sheet running out of balance issue. This issue may create trouble while preparing financial statements for the previous years. b. Begin using the new company file. If you are still confronting the issue after upgrading to a new version of QuickBooks, do the following. a. Try to install the QuickBooks of the old version once again. b. You must restore a backup which is generated before upgrading. c. Create the Restored data file for upgrade. d. Upgrading the company file once again in the latest version available.
You have a negative inventory which may hamper the Cash Basis Balance Sheet. Even after applying the common solution to repair the data damage with the data file you are confronting the Balance sheet out of balance in QuickBooks issue.	If you see that the transaction is damaged, or it causing this issue without being any one of the above transactions, then you can remove the transactions and the generate them again.

Conclusion!!

The Balance Sheet in QuickBooks plays a vital role as it helps provide a clear image of the company’s financial position. So, if you are dealing with the QuickBooks Balance Sheet out-of-balance issue, you can fix it by performing the solutions given above. Furthermore, if you are still struggling with this problem, talk to our QB professionals at Call Us : +1-866-408-0444 for guidance.