Sch L Balance Sheet from "Single Entry System"?

[John of PA]

Many of us prepare a Sch L balance sheet as part of a 1065, 1120S, 1120, or PA RCT 101. Our clients give us the information to enter on the balance sheet. Are we required to obtain a double entry system prepared balance sheet from the client, or can we just prepare the Sch L from a "single entry" set of books, asking the client to tell us all thier business assets and liabilities. How far do we have to go to be assured the balance sheet is fairly presented?

[ChEAr$]

First thing I'd want to see in case of a new client, (and this would be a new client!) is last year's 1120. And if no acceptable set of books had been kept, i.e. the cash basis single entry system on the back of scraps of paper or envelopes, . well, the ending balance sheet could be constructed with reference to beginning balance sheet and quizzing owner on current values. Trouble is in these cases, the owner might confuse his own personal assets with those owned by the corporation. He might list his personal vehicle for example, regardless of title. Full of pitfalls as we all recognize.

[mastertaxguy]

Schedule L balance sheet

Might be wise to ask, in the case of a new client, for the past three years of returns particluary if the TP has been switching preparers every year or so. You can then determine if the prior balance sheets are correct. Like with individuals who are new clients, we now need more than the last year return to check for energy credits (lifetime maximum) and the first time home buyer credits.