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Unsupported transactions and their solutions for the Balance Sheet by Class report

The Balance Sheet by Class report is only available in QuickBooks Premier and &qb_enterprise_solutions;.

The Balance Sheet by Class report is an advanced report that differs from other QuickBooks reports. Specifically, QuickBooks calculates the class allocations for the report each time you run the report. Because of this, certain transactions may cause unexpected results.

You can run the Balance Sheet by Class report on either a cash or accrual basis. QuickBooks builds the report differently for each basis. Consequently, you might experience different results depending on the report basis you choose.

The following is a list of common transactions that generate unexpected results on the Balance Sheet by Class report. This is not intended to be an all-inclusive list. If you experience unexpected results, please refer to the general guidelines for entering transactions to ensure an accurate Balance Sheet by Class report.

Most common unsupported transactions and their solutions

Journal entries with "unbalanced classes"

  • Creates unbalanced classes

  • Appears with cash and accrual basis report

Problem

You enter a journal entry that changes only one side of the balance sheet for a specific class. This creates an "unbalanced" balance sheet for the class. Here is an example.

Journal entry with unbalanced classes

The overall entry balances (debits equal credits). From the class perspective, the entry did not balance. It increases assets in Class A and decreases assets in Class B.

Solution

Debits must equal credits for each class.

To do this, add a "clearing" or "wash" account to the chart of accounts. Use the Other Expense type for the account. Then use the clearing account to balance the classes in the journal entry.

Here's the correct way to enter the preceding journal entry:

Journal entry with balanced classes

The total balance in the clearing account should always be zero (debits and credits are equal).

Paychecks allocated to multiple classes

  • Creates unclassified amounts

  • Appears with cash and accrual basis report

Problem

You assign multiple classes to a paycheck. The Balance Sheet by Class report doesn't support multiple classes on a paycheck. QuickBooks displays the transaction (bank account and payroll liabilities) in the unclassified column.

Solution

The report only supports assigning one class per paycheck.

Set a payroll preference to do this.

Only the QuickBooks Administrator can do this task.

  1. Open the Payroll & Employee preferences.

    1. Choose Edit > Preferences.

    2. In the Preferences window, click Payroll & Employees in the list to the left.

    3. Click the Company Preferences tab.

  2. Next to Assign one class per, select Entire Paycheck.

  3. Click OK.

Edit each employee and assign them to a class. Then QuickBooks automatically uses this class when you create paychecks. Learn more about tracking payroll expenses by class.

  • This solution ensures that the report shows the paycheck in the right class. It also means that you can't allocate a paycheck to multiple classes for the Profit & Loss by Class report.

  • The rule of thumb is to assign a single class per employee paycheck. This means you can use different classes for different employees. However, if you do, solving the problem with payroll liability payments is more difficult.

Payroll liability payments

  • Creates unclassified amounts

  • Appears with cash and accrual basis report

Problem

The Balance Sheet by Class report does not automatically allocate payroll liability payments to classes.

Solution

When you make a liability payment, edit the check and enter the appropriate class for each line item.

To do this task

  1. Open the Payroll Center.

    Choose Employees > Payroll Center.

  2. In the Pay Scheduled Liabilities section, select the scheduled payment you want to pay.

  3. Click View/Pay.

  4. In the Liability Payment window, review the payment.

  5. In the Class column, enter the appropriate class for each line item.

    • If you assign all paychecks to a single class, enter that class.

    • If you assign different employee paychecks to different classes, you must assign different amounts to different classes. To do this:

      1. Run the Balance Sheet by Class report on the last day of the period for which you are paying liabilities.

      2. Write down the amount you owe for each class. You can print the report if necessary.

      3. In the liability payment window, add line items so you have one per class.

      4. Based on step b, enter the amount and class for each line.

  6. Click Save & Next to save the check and display the next payment, or click Save & Close if this is the last check.

  7. After you create your last check or e-payment, the Payment Summary window appears. Review your payments and click Close.

Sales tax payments

  • Creates unclassified amounts

  • Appears with cash and accrual basis report

Problem

When you create an invoice, the Balance Sheet by Class report allocates the sales tax liability to the right class (based on the proportion of taxable sales items assigned to each class).

However, the report doesn't allocate the sales tax payment to the appropriate class. QuickBooks shows the payment in the unclassified column.

Solution

The sales tax check doesn't have a class field. You must make a journal entry to move the sales tax payment from unclassified to the correct class.

To do this task

  1. Determine the amount of the sales tax payment you should apply to each class. To determine these numbers, run the Balance Sheet by Class report as of the date you paid sales tax through. Look at the sales tax liability you owe for each class.

  2. Make a journal entry to move the payment from the Unclassified column to the appropriate class. Here's an example:

    Sales tax for Class A      500

    Sales tax for Class B      250

              Total                   750

    In this example, you would enter this journal entry:

    Sales tax payable

Prepayments from customers entered in Receive Payments window

  • Creates unclassified amounts

  • Appears with cash and accrual basis report

Problem

One method to enter customer prepayments is to use the Receive Payments window. However, you can't enter a class in the receive payments window, and QuickBooks can't refer to a prior transaction in the workflow to assign a class. As a result, the Balance Sheet by Class report displays the amount in the Unclassified column.

Solution

This problem is self-correcting. When you apply an invoice against the payment later, the report classifies the payment correctly. Therefore, you may decide not to correct the prepayments.

If you decide to correct this problem, you can make a journal entry to move the deposits to the appropriate class. You can make this journal entry before running financial statements and reverse it on the first day of the following period.

Discount entered in Receive Payments window

  • Creates net income difference

  • Appears with cash and accrual basis report

Problem

An invoice includes multiple classes. When the customer pays, you use the Receive Payments window to record an early payment discount. This causes a net income difference between the Balance Sheet by Class and Profit & Loss by Class reports:

  • The Profit & Loss by Class report shows the full discount in a single class.

  • The Balance Sheet by Class report allocates the discount based on the classes from the original invoice.

Solution

Enter a single class on the original invoice. Then when you receive the payment, enter the same class for the discount. In certain situations, you may have to enter multiple invoices to the customer.

Discount entered in Pay Bills window

  • Creates net income difference

  • Appears with cash and accrual basis report

Problem

A bill from a vendor includes multiple classes. When you pay the bill, you use the Pay Bills window to record an early payment discount. This causes a net income difference between the Balance Sheet by Class and Profit & Loss by Class reports:

  • The Profit & Loss by Class report shows the full discount in a single class.

  • The Balance Sheet by Class report allocates the discount based on the classes from the original bill.

Solution

Enter a single class on the original bill. Then when you pay the bill, enter the same class for the discount. If the vendor's bill has multiple classes, you must enter each class on a separate bill.

Using multiple currencies

  • Creates unclassified amounts and unbalanced classes

  • Appears with cash and accrual basis report

Problem

If you use multicurrency, the Balance Sheet by Class report shows exchange gains and losses as unclassified. Multicurrency transactions also create unbalanced classes because of how QuickBooks calculates balances for the report.

Solution

Because the Balance Sheet by Class report doesn't support multiple currencies, you shouldn't run or use the report if you use multicurrency in QuickBooks.

Pay bills with bill credit (with different classes)

  • Creates unbalanced classes on cash basis report

  • Creates accounts payable misclassification on accrual basis report

Problem

The following workflow creates problems on the cash and accrual basis of the report:

  1. You enter a bill with the following line items and allocations to classes:

           50% to Class A

           50% to Class B

  2. You enter a bill credit with a different proportion of classes.

           90% to Class A

           10% to Class B

  3. When you pay the bill, you apply the bill credit against the bill. This creates Unbalanced Classes on the cash basis report. On an accrual basis, the report shows the wrong balance by class in Accounts Payable. This condition continues after you pay the bill.

Solution

The solution is to use a single class for the bill and bill credit and only apply credit memos against bills if they use the same class.

Use Funds Transfer window to transfer funds between classes

Problem

You can't use the Funds Transfer window to transfer funds between classes.

Solution

You can make a journal entry to transfer funds between classes.

However, debits must equal credits for each class in the journal entry. To do this, add a "clearing" or "wash" account to the chart of accounts. Use the Expense type for the account. Then use the clearing account to balance the classes.

Assume you want to transfer $ 500 from the checking account for Class B to the checking account for Class A. Enter the following journal entry:

Funds transfer

The total balance in the clearing account should always be zero (debits and credits are equal).

Build assemblies

Problem

You cannot assign classes to build assemblies.

Solution

Because QuickBooks doesn't support classes for build assemblies, you shouldn't run or use the report if you use build assemblies in QuickBooks.

KB ID# H_UNSUPPORTED_TXNS_SOLUTIONS
9/26/2016 8:36:51 AM
QYPPRDQBKSWS05 9138 Pro 2017 270a37