To undo a trust payment there are two transactions in QuickBooks that we'll need to delete. This currently needs to happen in QuickBooks Online, so make sure that you have access to the firm's account. This article contains instructions on how to remove those items.
1. Remove two separate transactions in the Chart of Accounts
We'll need to remove two separate transactions in the Chart of Accounts:
The check out of IOLTA, into Operating:
The Payment from Operating to the Client:
2. Reverse the Payment OR Create Two Transactions
If the funds were already moved between the bank accounts you can reverse the payment. OR, if you'd prefer not to, you can create these two transactions:
3. Debit the Income Account and Credit the Specific Liability Account
Within the Journal Entry make sure to debit the Income account, and credit the specific liability account that the funds were taken from:
The funds should be moved from the Operating to the IOLTA Trust account.