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Balances Remaining After Year-End Close

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Hi:

Fiscal year 2019 was closed along with "Close Income Statement", over a year ago. Yet, balances are showing in the financials for a few Income Statement accounts.

These accounts, indeed, are correctly coded as "Income Statement" accounts and not as "Balance Sheet" accounts.

So, why would they have balances? Since closing was done over a year ago, what would be the resolution for these accounts including Retained Earnings?

Thanks!

John

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RE: Balances Remaining After Year-End Close

John,

I will try to show this example using my Cronus database.

I have a G/L Account called Repairs and Maintenance. It has a Balance as of 12/31/20 of 321.20 (see pic below).

Looking into the Account I see that 2 entries make up the balance today 321.30 (1/2/2020) and 225.00 (11/15/19) (pic below) and yes, I have already ran the Close Income Statement for 2019 as you can see.

Now I know the 11/15/19 entry belongs to 2019 but my 2020 balance reflects this amount, which should be in Retained Earnings. If I run a filter on the G/L Account and filter the Date to 12/31/19, the amount shown is reflected in the balance (pic below): Note: I am including the Closing Entries so the NET shows the 225.00 I have NOT closed to Retained Earnings.

I will now run Close Income Statement for 2019 again to move the 225.00:

Balance now only shows 321.30 thru 12/31/20.

I hope this walk thru helps and answers the Controllers question.

Thanks,

Steve
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RE: Balances Remaining After Year-End Close

Good Morning:

The controller doesn't deny that these account balances could be the result of posting simple entries at some point throughout the course of the fiscal year.

But, he further says that he's not 100% sure. For example, the balance of an amortization expense account is reflected as of 12/31/2019.

And, he has twice tried Close Income Statement to no avail.

So, he wonders if a glitch somehow created these balances. He would like to know, before he tries closing 2020.

Is there any way of knowing?

Thanks!

John
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RE: Balances Remaining After Year-End Close

John,

If the entries have a Posting Date = xx/xx/2019, they will remain there until the Close Income Statement is run for 2019 again. Ask the client are these entries correct and they belong with a Posting Date currently shown, in 2019. If he says yes, I would tell him to run Close Income Statement for 2019. This will not break or cause any issues related to the 2020 figures or future Close of 2020. And to help I am an Accountant.

Thanks,

Steve
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RE: Balances Remaining After Year-End Close

Hi Steve:

Thank you, for this!

The client had already run the IS Close, but the issue remains.

He wonders if a glitch caused it.

Of greater importance, he is scared to close 2020 until this is resolved. If the entries are still there after the 2020 close.......

What would be the next step?

Thanks!

John
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RE: Balances Remaining After Year-End Close

John,

This does occur when companies close their books and some audit transactions or correcting entries occur post Close Income Statement. The person who booked these should have rerun Close Income Statement for 2019 to pick-up these entries. I would suggest running the Close Income Statement now, for 2019. One question to ask is where these entries you found posted with a 2019 date correct in that they belong in 2019 or they should have been 2020? If they are 2019, follow my instructions. If they belong in 2020, I would create a General Journal reversing the 2019 entries on the exact Posting Date they occurred and recording them in the correct period/year 2020. You will still need to rerun Close Income Statement for 2019 to clear the 2019 entries to Retained Earnings.

Hope this answers your question and steps needed to resolve.

Thanks,

Steve
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JAngle 95 on at

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RE: Balances Remaining After Year-End Close

You mention 2019 in your description so that’s the prior year. From and to posting is found in two places. General ledger setup or user setup.

It will get picked up on audit either way. I’d say leaving it as is would be worse. I’m not a trained accountant so can’t fully comment.
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RE: Balances Remaining After Year-End Close

Hey Josh:

When you mention the prior year, which year?

Also, where would the from and to fields be?

If Close Income Statement is re-run, is that going to potentially cause other issues? I just need to be careful, since I'm a novice.

Thanks!

John
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JAngle 95 on at

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RE: Balances Remaining After Year-End Close

those postings must have been allowed to happen in the prior year. Would check the customer is utilising the from and to posting allowed correctly. For the residual amounts you can run the close income statement again for that period.