| SUMMARY: How
to use the Out of Balance Checker report to find unbalanced journal
entries. |
It's possible for your general ledger to become out-of-balance because
of system crashes during posting. This happens when one side of a
transaction (either a debit or credit) is posted, but the system crashes
before the other side is finished. The problem can happen at any time,
and it is difficult to prevent (since it is always system related).
| For performance reasons,
Clients & Profits doesn't automatically warn you when you're
out of balance. But it's easy to see if your G/L are out of balance:
simply look at the bottom line of the Balance Sheet (it'll show
the out of balance amount), or at Total Assets, Liabilities, and
Equity section on the Trial Balance (which should always be zero). |
The key to solving an out-of-balance G/L problem is to find the missing
(or duplicated) journal entries. Since all JEs for a particular transaction
have the same reference number, it's easy to track down the bad entries.
To make troubleshooting your G/L easy, Clients & Profits provides
a special Out of Balance Checker utility.
How The Out of Balance Checker Works
The Out of Balance Checker utility works by analyzing your G/L journal
entries transaction-by-transaction. It adds up the total of each transaction
(i.e., JEs with the same reference number), then highlights the ones
that don't balance. The Out of Balance report only shows the transactions
that need fixing.
- The Out of Balance Checker only finds unbalanced entries that
need to be corrected. It does not change your general ledger in
any way. You'll need to make your own judgments about how to correct
an unbalanced entry (that is, making the appropriate debit or credit
adjusting entry).
- The total debits and credits for each reference on the Out of
Balance checker report correspond to the total debits and credits
in the G/L window for that transaction.
The total amount of the entries on the report should equal the out-of-balance
report on the Balance Sheet or Trial Balance.
Check Each Out-of-Balance Entry
Once you've printed the Out of Balance Report, you'll need to check
each transaction shown on the report. Each transaction is unbalanced
because it is either (1) missing a debit or credit entry or (2) a
debit or credit entry is duplicated. How you'll fix the transaction
depends on what's wrong with it. In any case, you'll need to make
adjusting journal entries (using the Add Adjusting JE utility - see
below) to bring the transaction into balance.
- Be sure to note the entry's reference number. You'll need to find
the transaction in the General Ledger by this reference number.
Once you've found the transaction, you'll see its debit and credit
journal entries.
- The reference on the out of balance checker report tells you where
the problem entry originated. Journal entries posted automatically
from Accounts Payable, the Checkbook, Accounts Receivable, or Client
Payments have a system-credited reference number (which begins with
AP#, CK#, AR#, or PMT# respectively). For instance, a reference
number beginning with PMT# indicates a Client Payment. This tells
you that Clients & Profits added this journal entry. Any entry
with a reference number that doesn't begin with AP#, CK#, AR#, or
PMT# was added directly into the general ledger by the user.
- You can find out who added or posted the entry by double-clicking
on an entry in the G/L window. The initials of the person who added
the entry appear in the Edit JE window. The person who added or
posted the entry could help you understand what happened during
posting to cause the out of balance entry.
Accounting Periods and Unbalanced JEs
It's possible for a G/L entry to be in balance but still appear on
the Out of Balance Checker report. This happens when some of the transaction's
entry were posted into different periods. Although the transaction
as a whole adds up correctly, the amounts were split between two (or
more) different periods. This kind of transaction will cause the month's
financials to appear out of balance--although the YTD total will be
ok. How can this happen? It can happen, for example, when an invoice
is added into a period, unposted, then reposted into another period.
If any one of the transaction's JEs are not saved, then it'll be out
of balance. In this situation you'll need to make the appropriate
adjusting entries into the right periods.
- In C&P Pro 2.3 and C&P Classic 2.1 (or
higher), the Out of Balance Checker show unbalance JEs separately
for each period. In prior versions, the period shown on the report
was the period of the last debit or credit in the g/l window).
Before Making Adjusting JEs...
If a transaction is missing some entries, be sure to batch post the
invoices, checks, or client payments that have the problem. If a posting
crashes while it's working, choosing Post again will often pick up
where it left off--and finish creating the journal entries needed
by the transaction.
- If you do not choose finish posting, the missing debits or credits
will appear the next time you post. If you'd made adjusting entries
to the transaction, you could end up with duplicate JEs.
Also, make sure the sub ledger is accurate before attempting to fix
the G/L:
For client payments, accounts payable, and checkbook, make sure the
distribution equals the invoice or check total. If you are unsure
about this, please fax a screen shot to Clients & Profits, Inc.
for review. To check an accounts receivable invoice, actually print
a copy of the invoice. Check the subtotal before tax, tax amount,
and invoice totals. If the invoice does not add up, call Clients &
Profits, Inc. for assistance
- If there is a job involved, check its totals for accuracy. If
the G/L is out of balance, the job task's totals might not be accurate,
either. In some cases, you may need to verify/recover the one job
is correct the totals.
- Be sure to use the correct G/L account when adding your adjustment.
Otherwise, your General Ledger could be thrown out of balance with
your vendor or client aging report.
Making The Adjusting Journal Entries
First, determine the debits and credits journal entries that should
have hit the G/L. Look at the invoice, check, or client payment in
A/P, A/R, the Checkbook, or Client Payments. Compare the amounts here
with the posted journal entries in the General Ledger window. There
is one journal entry for each line item on an invoice, check, or client
payment--plus a debit or credit entry for the total amount. If you
need assistance with this, contact your accountant.
- When reviewing a transaction in the G/L window, the information
in the upper part of the screen (i.e., period, posting status, etc.)
is shown for the highlighted entry. Different journal entries could
have different dates, etc. if they were added or posted separately.
- The G/L Journals show entries grouped by reference number. If
you're looking at many entries at one time, or a transaction is
lengthy, try printing the g/l journal instead. Note that you must
enter the correct dates and periods to pull all line items for the
out of balance entry. (Make sure total debits and credits on the
journal equal the G/L window before using these reports for analysis.)
Next, determine the difference between what should have
posted and what actually posted. The result is the adjusting
entry (or entries) you'll need to make.
How To Make A One-Sided JE
A one-sided journal entry can be made from Setup > Utilities >
Add Adjusting JE.
It's important to enter the reference number EXACTLY as it appears
on the G/L entry. This will ensure that your adjusting entry appears
together in the right transaction. If the reference number doesn't
match (for example, AP#1928 vs. AP1928, which is missing the "#")
the adjusting entry will appear separately on the Out of Balance report.
Also, use the date shown in the original invoice, check, or client
payment, as well as the period you have determined to be out of balance.
- Adjusting JEs do not affect job reports, except for the job income
statement. The client and vendor numbers are used for sorting JEs
on audit trail reports.
After saving your adjusting entry, print a proof list and post from
the General Ledger. Once the JEs are posted, print a Year to Date
Trial Balance to check your work. The total assets, liabilities, and
equity should be zero for all accounting periods. Then run the Out
of Balance Checker again--it should total zero.
| DO NOT
add an adjusting (one-sided) journal entry unless the out of balance
checker says that you are out of balance. If your balance sheet
and trial balance are out of balance even though the out of balance
checker totals zero, call Clients & Profits. |
