Entry for deleting payment received in prior year in QBO

Subject: Assistance Needed for Deleting Incorrect Payments in QBO

Hello,

I have an invoice that was generated in 2023, with payments received against it in both 2023 and 2024. Specifically, there are two payments recorded in 2023 and one in 2022 that are incorrect and need to be removed. Unfortunately, since those years are locked, I’m unable to delete these entries.

It seems the bank reconciliation was affected due to an adjusting entry made on 12/31/2023, which addressed discrepancies from previous years. As a result, the balance due on this invoice is currently understated by the three incorrect payments made in 2022 and 2023. The invoice was ultimately paid in full in January 2025, which included those three payments as well as the remaining balance.

I’m looking for guidance on how to properly address this in QuickBooks Online. What steps should I take to remove those three incorrect payments from the invoice while accurately reflecting the full payment made in January 2025? Would a combination of a journal entry and a new invoice for the total of those three payments be the correct approach? I appreciate any advice you can provide!

Thank you!

To address the issue of the incorrect payments received in QuickBooks Online (QBO), you can follow these steps:

Step 1: Create a Journal Entry to Reverse the Incorrect Payments

Since the years are locked, you can create a journal entry to effectively “reverse” those incorrect payments without directly affecting prior transactions.

Go to the + New button.
Select Journal Entry.
Date: Use the date when the payments were made (e.g., the date of the payment in 2022 and the two payments in 2023). However, it’s best practice to date the journal entry to the current date, since it won’t affect prior year balances during reconciliation.
Account: Choose the accounts affected by the payments:
Debit the Accounts Receivable account for the amount of each incorrect payment.
Credit the income account or the account you originally recorded the payments against.
Description: Make a note indicating this entry is to reverse incorrect payments against Invoice [Invoice Number].

Example Journal Entry:

Debit Account Receivable: $XXX (first incorrect payment)
Credit Income/Revenue Account: $XXX (first incorrect payment)
Debit Account Receivable: $XXX (second incorrect payment)
Credit Income/Revenue Account: $XXX (second incorrect payment)
Debit Account Receivable: $XXX (third incorrect payment)
Credit Income/Revenue Account: $XXX (third incorrect payment)

Step 2: Create a New Invoice for the Total of the Incorrect Payments

To keep your records clear, create a new invoice for the amount of the three payments you reversed, indicating this is a re-billing.

Go to the + New button.
Select Invoice.
Set up the invoice details:
Customer: Choose the customer from the original invoice.
Date: Use the current date.
Line items: Include a description (e.g., “Re-bill for previous payments”) and enter the total amount of the 3 payments that were reversed.
Save the invoice.

Step 3: Record the Full Payment in January 2025

When the invoice is paid in January 2025, you will record this payment:

Go to the + New button.
Select Receive Payment.
Select the customer and link the new invoice you just created.
Enter the payment amount that was paid in full.
Save the payment.

Important Notes:

Confirm that the journal entries and invoices reflect the intended changes without affecting the Accounting integrity for prior years.
It may be helpful to consult with a CPA or accountant to ensure compliance with Accounting principles and tax regulations, especially since entries are being made in locked periods.

Following these steps should help you accurately reflect the corrections needed while ensuring your QBO records stay organized and compliant!

One response

APAdmin

11 March 2025 at 11:16 AM
To address the issue of the incorrect payments received in QuickBooks Online (QBO), you can follow these steps:

Step 1: Create a Journal Entry to Reverse the Incorrect Payments

Since the years are locked, you can create a journal entry to effectively “reverse” those incorrect payments without directly affecting prior transactions.
1. Go to the + New button.
2. Select Journal Entry.
3. Date: Use the date when the payments were made (e.g., the date of the payment in 2022 and the two payments in 2023). However, it’s best practice to date the journal entry to the current date, since it won’t affect prior year balances during reconciliation.
4. Account: Choose the accounts affected by the payments:
5. Debit the Accounts Receivable account for the amount of each incorrect payment.
6. Credit the income account or the account you originally recorded the payments against.
7. Description: Make a note indicating this entry is to reverse incorrect payments against Invoice [Invoice Number].
Example Journal Entry:
- Debit Account Receivable: $XXX (first incorrect payment)
- Credit Income/Revenue Account: $XXX (first incorrect payment)
- Debit Account Receivable: $XXX (second incorrect payment)
- Credit Income/Revenue Account: $XXX (second incorrect payment)
- Debit Account Receivable: $XXX (third incorrect payment)
- Credit Income/Revenue Account: $XXX (third incorrect payment)
Step 2: Create a New Invoice for the Total of the Incorrect Payments

To keep your records clear, create a new invoice for the amount of the three payments you reversed, indicating this is a re-billing.
1. Go to the + New button.
2. Select Invoice.
3. Set up the invoice details:
4. Customer: Choose the customer from the original invoice.
5. Date: Use the current date.
6. Line items: Include a description (e.g., “Re-bill for previous payments”) and enter the total amount of the 3 payments that were reversed.
7. Save the invoice.
Step 3: Record the Full Payment in January 2025

When the invoice is paid in January 2025, you will record this payment:
1. Go to the + New button.
2. Select Receive Payment.
3. Select the customer and link the new invoice you just created.
4. Enter the payment amount that was paid in full.
5. Save the payment.
Important Notes:
- Confirm that the journal entries and invoices reflect the intended changes without affecting the Accounting integrity for prior years.
- It may be helpful to consult with a CPA or accountant to ensure compliance with Accounting principles and tax regulations, especially since entries are being made in locked periods.
Following these steps should help you accurately reflect the corrections needed while ensuring your QBO records stay organized and compliant!
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