QB balance sheet - out of balance

My client's balance sheet is out of balance by $455.36 and it goes back to 2011. On Dec 31 2010 it is in balance, on Jan 1, 2011 it is out of balance by the $455.36. I have spent way more time than I should only because I have the time right now, and I can't find a means to make a correction. I did a search for the amount and nothing came up, so it doesn't appear to be related to any single transaction. Any suggestions?

Compare the two balance sheets and see what accounts are different at 1-1-11 and 12-31-10. If its retained earnings, it sounds like something did not close correctly at the end of 2010.

There must be one or a few specific accounts that are changed from one day to the next, unless you have a bunch of legit transactions dated 1/1/2011 that are hiding the problem. Maybe you will have to start temporarily changing the date on 1/1 transacts until you find the discrepancy. On the few occasions I've encountered this, I seem to recall I could always drill down and find the problem pretty easily once I had the specific date pinned down.

Sometimes it's just a transaction that has an account for the debit but not the credit, or vice versa.

This has gotten more interesting. I did a Google search for resolving an out of balance QB file and using that was able to run a report that shows the two transactions causing the problem. Now I'm not sure how to implement a fix. The accrual BS is in balance, it's the cash BS that is off. So on January 1, 2011 I prepared several journal entries to adjust AR with a credit to sales and debit to AR. When I look at the income statement all of them show up but only two of them are causing a problem. When I try to receive payments to clear them, it appears that they are already cleared so I am not able to fix it with that.

The order of the lines in the journal entry involving A/R can make a difference. Here are some cut and paste items from QB ProAdvisor material, hope they help.

=====[quote from QB Advanced Cert study materials]================

Intuit never meant for the Balance Sheet to be used for cash basis reporting. Accounts Receivable still appears on a cash basis balance sheet for the following reasons:
• Credits and/or payments have not been applied to invoices
• An item on an invoice posts to a Balance Sheet account

However, other issues are somewhat common.
1. Enter Journal Entry adjustments to Accounts Receivable and make sure Accounts Receivable is on the second or subsequent line.
2. Create a customer called Accounting Adjustments for the journal entry.
3. Reverse the Journal Entry on the first day of the following fiscal year.
4. Use the Receive Payments window to apply the journal entry and the reversing entry to each other. If you do not, the Open Invoices report will show activity for a customer called Accounting Adjustments.

Thanks Makbo. It doesn't work though. I deleted the journal entries and then re- entered them. Everything was good at that point, but as soon as I cleared the JE against the hanging credit memos, I was out of balance by the same amount because then QB brings the credit into the mix and negates the affect. So it seems the only way to put this right and keep it right is to re-enter the JEs again and not clear them. In the future though, if anyone tried to clear the two parts against each other (and not knowing otherwise, it's something I would do), it would recreate this problem. As long as an open invoice report isn't run, all will be right with the world.

Within the last year, we had a client with a similar situation. I can't remember the specifics, but I think that unapplying the payment/customer receipt and reapplying it against the invoice worked to put it back into balance.

I've run into this where a payable or receivable was posting against another balance sheet account instead of a P&L account (e.g. A/P "bill" created to pay off credit card or loan balance). It doesn't sound like this is the case here, but I thought it might be useful to mention.

Have you run the rebuild data utility?

Empire CPA - several times over the last few years. It never fixes it.

Do they run inventory? I've had this happen when an item cost was deleted from an item of inventory and it threw the balance sheet out of balance. Maybe someone making some end of year "adjustments?"

Run a rebuild. If that doesn't work, you'll need to contact QB tech support.

A little late on this reply. I'm assuming you mean that Assets do not equal Liabilities + Equity on the balance sheet under Cash Basis. I have encountered this problem before, and each time it was caused by a corrupted data entry.

To locate it, first determine the year when it started (run the balance sheet for previous years and see in what year the balance sheet goes out of balance). Then, to narrow it down, run the balance sheet for the first six months, and then the last six months, to see which half of the year the bad entry sits. Do this iteratively until you locate the day.

Then, try to look at all transactions on that day that affect the balance sheet. Run the balance sheet for the date you've identified and then double click on each account to look at the transactions in that account. Often the "bad" one will pop out, as it usually is the amount of the imbalance, and usually in A/R or A/P. When you locate it, record or print out the transaction so that you can put it in later. Delete the transaction, and then enter it again. You can then confirm that the problem is gone by re-running the balance sheet, and all should be in balance.