Bookkeeping Question

[JG EA]

Client received 2005 and 2006 books and taxes in previous years. In the books are a complete print out of the GL, etc.

We were getting ready to do 2007 when this year my client carefully goes over all their assets. I always ask them to review, but apparently reviewing was not as good as going over them line by line at home with their records in front of them.

I then learn of many errors. One big one was we counted $60k of income in 2005 instead of a sale of an asset. And the depreciation was on for the full year in 05 and also on 06. In 2006 there were about 4 or 5 other big changes and several small ones.

Well, we will amend but my question: Should I do adjusting entries dated 12/31/05 and 12/31/06? Is it enough to then just give them a sheet to put with their books?

[wvtaxguy]

Seems adjusting entries for the accounts for the years impacted would be prudent. The accounting software (if used) should streamline the process and facilitate the amended tax return process.

[JG EA]

So, you don't think a new GL needs to be done, new P&L, etc?

[wvtaxguy]

Materiality might be an issue. However, based on what I read, I would provide copies of revised financials. Not sure what the other transactions involve but just with the sale of the asset considered income there are changes to income, depreciation, accumulated depreciation, asset accounts and also a probable capital gain or loss from the sale.

[JG EA]

Thanks very much. I think I will provide P&L, Balance Sheet, Trial Balance, etc and mark all these at the bottom To Reflect Amended Return or something and not another GL.