Setting up existing company - A/P discrepancies

HELP PLEASE

It has been years since I've done bookkeeping and have come back to using Sage. My issues stem from the trial balance that the accountant provided.

I have entered the trial balance but am getting a message...The sum of your Vendor's information does not equal the current balance of account Accounts Payable. I realize it's due to the fact that there are historical transactions I need to enter. BUT...some of the dates of the transactions are for the current year (2018 - yes my client is behind). Also $4000 of the amount is for accual for 2018 YE. How do resolve this? The accountant uses another program and has suggested that I unlink the A/P account. I don't think this is a good idea.

Any assistance would be appreciated.

Cathy B

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  • 0

    Hi Richard,

    Thank you for confirming that I was correct regarding the historical transactions.

    To clarify, the trial balance date is Jan 31, 2018. The a/p transactions vary in dates. 

    Jan 1/18 $3937.50, Feb 27, 2018 $199.50, Jan 2, 2019 $7851.81. Then $4000 for accrual for 2018 YE. I know that I can enter the Jan 1/18 invoice into historical transactions, but can I enter the rest of the invoices in as historical data when the fiscal start is Feb 1/2018? Same for the accrued liability of $4000. Do I need to set up an accrued liability account? I don't see this as part of the general chart of accounts.

    The accountant also advised that I enter the trial balance for Feb 1/17 to Jan 31, 2018 and then close the year. It does not make sense as the TB for 2018 YE (Jan 31/18) are the closing balances. Should I not set the fiscal year start and set up at Feb 1/18 not Feb 1/17 since I already have the 2018 YE trial balance?

    Thank you again for your assistance. I don't think 2019 entries should be entered until I have the company set up correctly.

    Cathy

  • 0 in reply to Cathy B
    The accountant also advised that I enter the trial balance for Feb 1/17 to Jan 31, 2018

    I am going to assume based on your dates, that Jan 31 is your year end and Feb 1 is the start of a new fiscal year.  Remember I said there were about 5 ways of setting up a company.  The accountant is correct.  This is my number 1 method of setting up a file when you are starting to use Sage 50 at the beginning of a new year.  You can set it up as you suggest but there is more flexibility by setting up 2017-2018 for the trial balance.  A side benefit is a full set of reports for that year end.

    Fiscal start would be Feb 1/17, Fiscal End is Jan 31/18 and the Earliest Transaction Date would be Jan 31/18.  This allows you to enter the Trial Balance, including Income Statement accounts as of the end of the year.  The program will also allow you to make adjusting journal entries on Jan 31/18 later if you need to adjust the opening balances later in the year (not everyone is doing this kind of thing two years later so year end adjusting entries are not always available at the time and need to be posted later).  This also allows you to move the fiscal year to the Jan 31, 2019 year end and post entries while leaving open the possibility to post adjusting entries to Jan 31, 2018.

    The Accrued Liabilities Account, if it does not exist, should be added to the Sage 50 file and the balance updated to the proper $4000 amount, removing it from the Accounts Payable amount.  I usually use the accountants ungrouped trial balance for this kind of thing so they normally show up separately anyway with the accountants I work with.  Each accountant will do things slightly differently and no one way is more right than the other but the fact you were give the $4000 as Accrued is good information to use when you need to set up.  Make appropriate notes for the changes in your setup notes.

    Jan 1/18 $3937.50, Feb 27, 2018 $199.50, Jan 2, 2019 $7851.81.

    For a Trial Balance dated Jan 31/18, the Feb 27/18 and Jan 2/19 amounts are irrelevant and should not be included.  Only the $3937.50 should be split to individual vendor invoices and posted as Historical entries under those vendor ledgers on the Historical Transactions Tab of the ledger.  The rest are not Historical Transactions because you are setting up to use the file starting Feb 1/18.  Any date after that should be posted as a regular purchase invoice along with all the other transactions you need to post on or after Feb 1/18.

    Once you have the trial balance entered and it is balanced, and you have entered all individual Vendor invoices that make up the total of the Accounts Payable account, check the Data Integrity on the Maintenance menu.  If it balances and says "Data OK", you are likely set up ok but you should double-check to make sure nothing is missing.

    Then you can take an appropriate backup of the file, move the fiscal year forward from the Maintenance menu, Start New Year (Fiscal Year will likely be the only option).  This will move your fiscal year to Feb 1/18 to Jan 31/19 and the session date to Feb 1/18.  You can now start posting the data for the new fiscal year.

    If for some reason the startup of the file is wrong, you can still make journal entries to Jan 31/18 as long as you do not move to the fiscal year Feb 1/19 to Jan 31/20.  Once you move to the next year, you will have to post opening balance adjustments to Feb 1/18.

  • 0 in reply to Richard S. Ridings

    Thank you again Richard. I actually thought that was what I should be doing. I started to do this exact thing last night. The only thing I am hesitant to do is to leave out the 2019 invoices. Those invoices were delivered in 2019 but they were for 2017 YE (accountant invoices). Should I still enter them for 2019? If I do this then the Retained Earnings - Previous Year account will not match what the accountant trial balance. I suppose since I am adjusting the accounts payables, it shouldn't make a difference.

    Thanks for all your help! Data integrity> Data ok!

    Cathy

  • 0 in reply to Cathy B

    Now you are asking an accounting question, not how to use Sage 50.  You might find it better to ask the accountant who presented the invoice to tell you exactly how to enter it.

    However, based on my previous experience, Historical entries in Sage 50 are only for those entries dated before the effective start date of using Sage 50 (Feb 1/18 in your case).

    The date of an invoice is the date of the entry.  From a tax perspective, accountants (and those of us doing bookkeeping) usually set up an accrual expense in the applicable fiscal year for these types of transactions.

    You mentioned the $4000 accrual, so likely that was at least partially for the accounting fees applicable for that fiscal year.

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  • 0 in reply to Cathy B

    Now you are asking an accounting question, not how to use Sage 50.  You might find it better to ask the accountant who presented the invoice to tell you exactly how to enter it.

    However, based on my previous experience, Historical entries in Sage 50 are only for those entries dated before the effective start date of using Sage 50 (Feb 1/18 in your case).

    The date of an invoice is the date of the entry.  From a tax perspective, accountants (and those of us doing bookkeeping) usually set up an accrual expense in the applicable fiscal year for these types of transactions.

    You mentioned the $4000 accrual, so likely that was at least partially for the accounting fees applicable for that fiscal year.

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