FAQ #: 88
My Daily Invoice Register show amounts being posted to an invalid account or the error account.

Amounts posted to an invalid account can easily be corrected by making a manual journal entry to "move" the amount out of the invalid account into the appropriate account. The first step in this process, however, is to determine the correct account(s) that the amount should have been posted to.

In reviewing your Daily Invoice Register, you are likely to find that entries are being made to several accounts. These accounts include Accounts Receivable, Cash, Sales, Inventory, Cost of Goods Sold, Freight, Sales Tax, and possibly deposits accounts. Often times, with the large number of accounts involved, and the amount of invoices from a single register, it can be difficult to determine where the amount belongs.

Here are some guidelines to keep in mind:

1. If the invalid account resulted from an inventory item being coded incorrectly, the account will usually have the warehouse, order#, line#, and part number displayed out to the right of it.

2. Balance out the accounts. Match up the accounts that off-set each other and try to determine what account(s) are off. For example: the inventory and cost of goods sold accounts should off-set each other. Match up your cost of goods sold and inventory accounts. The amount should for all inventory accounts should match up with the cost of goods sold accounts. The amount posted to Accounts Receivable (+ cash + credit cards) should match up to Sales + Freight + Sales Tax.

3. Balance the amounts posted to each account with the register totals. If the register totals show 150.00 in sales tax, then the journal entries to all of the sales tax accounts should add up to 150.00.

When you have located the correct account for the invalid account amount, make a manual journal entry. Since we want to "move" the amount, we will make an entry to the invalid location that is the opposite of the entry already made, then an entry to the correct account that is the exact of the invalid entry. For example, if the register credited 150.00 to an invalid account and we determine it to belong in the sales tax general ledger account, we will make a debit entry to the invalid account and make a credit entry of 150.00 to the sales tax account.

When making the manual journal entry, keep in mind that the original account was invalid, meaning that it was not defined in general ledger. Therefore, you will not be able to make a manual entry to an account that is not on file. There are two solutions for this. One is to set up the invalid account in the general ledger master file. Once the account is set up, you will be able to see the entries made to it and to make a manual journal entry. The other option is to run the Trial Balance report. The trial balance moves all entries that are made to invalid (non-existant) accounts to the error account. Once the trial balance has been run, you can make the manual adjusting entry using the 99999 error account.

Since you now know the source of the invalid amount posted to the general ledger, fix the problem so that it does not keep recurring. If the problem is on inventory items, correct the accounts on those items. Other problems may need to be corrected in the Application Interface Records. But, it is important to correct the problem so that it does not keep happening.