1120S balance sheet adjustments.

[Safire]

If your beginning balance sheet numbers were wrong, can you adjust them or do you have to go back and amend last years return to fix it?

[Matt Sova]

What is wrong with it?

If it is a balance sheet debit and a balance sheet credit (for instance cash is understated and officer loan payable is as well) then no need to amend.

Usually if the Balance Sheet is wrong it will also affect the Income Statement. If cash is understated, maybe sales were as well. You need to look at the reasons why the B/S is wrong.

[JoshinNC]

Matt

Mayber the B/S is B.S.

LOL!!

[Snaggletooth]

Source of Error

Is the "error" simply something cosmetic from last year's return, or did something cause it? Sapphire, did you do the return last year, or are you cleaning up someone else's mess?

Regardless of how the error occurred, you need to be in balance for both the BEGINNING and ENDING of 2005 on this year's return. (You've probably figured that out - it doesn't take a Solomon) If last year's error was cosmetic, I think I would do nothing else for 2004, especially if someone else filled it out.

If you filled out the 2004 form and it went into the mail in an out-of-balance status, then you have an obligation. If you use accounting software, most accounting packages will not allow you to leave a session with an out-of-balance set of books. If you made simply a transcription error from the accounting records, then it is probably cosmetic and I wouldn't do anything else unless notified by IRS. But you have to determine if the INCOME statement is out-of-synch as well. If this is the case, you need to make sure that the true income was properly reported on the tax return, and if not, then you must amend the return.

[Safire]

Josh, good one!



Matt & Snaggletooth

I did do the return last year and am angry at myself for not making better notes. As far as what's wrong with it, it's in the receivables. Either I looked at the screen wrong last year or I decided to make my adjustments in the receivables to make it balance. ( Don't Shoot )

What I have is a businessman who likes to enter everything in Qbooks checkbook and invoices before they are done or owed or due, he likes to look "down the road" as he calls it, so I am left with numbers that are subject to change if something falls through. ( Don't Ask )

So..... this year I decided to force the balance again through the receivables ( Don't Tell )and after dbl checking the Federal return and I go to the State return to dbl check, something had gone screw-ey with my depreciation and my 3 year OTR tractors had turned into Furniture with 30 class life.

Now I have to start over.

Can I have a negative retained earnings on the balance sheet?

[geekgirldany]

QuickBooks can become a big pain regarding Balance Sheet. Client can do anything in there. It almost always shows up in the Balance Sheet. I have found that alot of times Accounts Receivable can be off because a payment wasn't applied to an invoice. Accounts Payable can be off for that same reason also or maybe the client put in a General Journal entry you didn't know about.

You can have a negative retained earnings if it is caused by a loss. You can't have one that is caused by shareholder distributions.

[Safire]

Thanks geekgirl, I found part of the root of this problem. Beginning AAA acount was typed in wrong.

I have had a time finding suitable software since going out on my own, we used Drake at my old office and that was just not an option that first year.

I have used 3 different softwares in 3 years to do this return and each time I have data entry from scratch.

No negative there, now that I fixed that.

[rosieea]

You can have a negative retained earnings if it is caused by a loss. You can't have one that is caused by shareholder distributions.

Actually, it's AAA that can't be reduced below zero by distributions, but retained earnings can. Therefore, AAA and retained earnings will not necessarily match.