QB Issue Resolution:
“The Reserve Account is shown as Other Current Liability on the Balance sheet and is showing the pre-transfer total. How do I correct that total without showing income or expense?”
Tracking reserves as Liability is not typical. This would be a Restricted Equity balance, and would be income when you first get it. So, if it currently is Liability, then the Payment out of those funds for a Restricted Purpose “releases” that liability, and that is income now. So, the way to do this is to open that Liability account as a Register view, and Reduce the balance here, posting as income. For instance, this type of scenario is common:
General Funds paid for a Roof repair; Reserves bank needs to repay General funds and this also reduces the liability (funds were used as committed to) and that is Income (ours to keep because we earned it and used it as committed).
The other way to do that would be to Write the Check “from” liability and not as an expense. Now you see the problem with this method, because you really did repair the roof and that isn’t captured by tracking this as Liability only.
” I tried transferring funds from the Operating to the Reserve Account via the Bank Transfer function but it’s changing the Net Income number.”
That never hits the P&L, so this cannot be correct. This is between the two bank accounts.
“If the Board votes to move funds from the reserve account to the operating account, I guess that should change the net income?”
In your case, because of tracking this as Liability and not income when first received, it will be a Release of Liability every time you move or use Reserved funds. The reason needs to be either “return” of the liability, such as if everyone gets a small rebate (to reduce overage of reserves) or it is a Use of the funds and that will make it income for you.
I would review with your own CPA if this isn’t supposed to have been income when you first got it. If the Reserve Bank Account is an actual Trust account, then it would not be income until you declare it “released.”
Resolution for Issue 'How do I correct the Balance sheet after I transfer funds?' available: Yes (Solved).
Source: Intuit Community forum.
How do I correct the Balance sheet after I transfer funds?: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.Support for liability
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