Reversing an Old Accounts Payable
The accounts payable ledger tracks all of the outstanding invoices that a company must pay. Post the cost to the payable ledger when the invoice is received, recognizing the cost in the applicable expense account of the general ledger. Whether you are reconciling the payable ledger or you have received a credit on a payable, it is important to understand how to reverse older payable entries to remove them from the books.
Locate the original entry in the payable ledger for the invoice that you want to reverse. Review the details of the entry to determine the exact amount of the transaction and the expense account where the cost was recorded. The expense account will be the one debited in the transaction.
Create a new journal entry to debit the accounts payable ledger for the amount credited in the original entry. Credit the expense account for the same amount.
Post the entry to the ledger, then verify the balances. Make sure the entry posts correctly and the payable ledger balance adjusts accordingly.
File all documentation related to the entry with your accounting documents for the current period. Include the original invoice as well as any information supporting the reversal.
Include notes related to the transaction in any financial reporting or statements for the period if the amount of the payable is material to the final results for that period.