Balancing an S-Corporate balance sheet on Form 1120-S in ProConnect

• Cash
• Accounts receivable
• Less allowances for bad debts
• US government obligations
• Tax-exempt securities
• Other current assets
  • This may include prepaid federal, state or city tax, if any of the Accrued taxes boxes are checked on the Miscellaneous Information screen.
• Loans to shareholders
• Mortgage and real estate loans
• Other investments
• Other assets

• Accounts payable
• Mortgage, notes payable - current year
• Other current liabilities
  • This may include federal, state or city tax payable, if any of the Accrued taxes boxes are checked on the Miscellaneous Information screen.
• Loans from shareholders
• Mortgages, notes payable - long-term
• Other liabilities
• Capital stock
• Additional paid in capital
• Adjustments to shareholder's equity
• Less cost of treasury stock

• Inventories
  • This amount automatically flows from the Cost of Goods Sold (1125-A) screen.
  • If the amount is different from the COGS, enter the amount in Inventories (if different from COGS) in the ending column of the balance sheet on the Balance Sheet screen.
• Prepaid federal tax
  • If the box Accrue federal tax is selected on the Miscellaneous Information screen, the program will adjust the prepaid federal income tax amount based on the actual tax calculated.
  • In this case, an entry is required for the ending balance. Estimates don't get automatically included in this calculation and must be entered in the ending balance for prepaid tax.
• Prepaid state tax
  • If the box is selected for Accrue state tax option 1 on the Miscellaneous Information screen, the program will credit the ending balance of prepaid state tax up to the prepaid state tax entered, and credits state tax payable by any tax remaining.
  • In this case, an entry is required for the ending balance. Estimates don't get automatically included in this calculation and must be entered in the ending balance for prepaid tax.
• Buildings and other depreciable assets
  • The program will automatically add any assets placed in service in the current tax year on the Depreciation screen to the amount entered on the Balance Sheet screen, in the beginning column of Buildings and other depreciable assets. The program will also subtract any assets sold during the year to arrive at the end-of-year balance.
• Less accumulated depreciation
  • The program automatically enters accumulated depreciation on the balance sheet from assets on the Depreciation screen, plus the amount entered for Less accumulated depreciation in the beginning column of the Balance Sheet screen, and subtracts any depreciation from assets sold during the year to calculate accumulated depreciation at the end of the year.  
  • The program will default to using federal tax depreciation in this calculation unless an entry is made in Current year book depreciation, on the Balance Sheet Miscellaneous screen.
• Depletable assets
  • The program automatically calculates the ending balance as follows: Depletable assets, beginning column on the Balance Sheet screen, plus current-year change in depletable assets entered on the Oil and Gas screen.
• Less accumulated depletion
  • The program bases its calculation on the entry in Current year book depletion (Ctrl+T or amount) on the Balance Sheet Miscellaneous screen.
  • If this field is left blank, the program uses federal tax depletion to calculate the ending balance of accumulated depletion. The current year depletion calculated is added to the beginning column of Less accumulated depletion on the Balance Sheet screen to arrive at the ending amount.
• Land (net of any amortization)
  • For this calculation, land entered on the Depreciation screen is defined as an asset placed in service during the current year, having an entry of 99 in Method. The current year change in land from the Depreciation screen consists of:
    • The cost of any land placed in service during the current year, minus
    • The cost of any land sold during the current year.
• Intangible assets
  • The program automatically calculates the ending balance as follows: Intangible assets (beginning) on the Balance Sheet screen, plus current year change in intangible assets entered in Depreciation on the Depreciation screen.
  • For this calculation, an intangible asset entered on the Depreciation screen is defined as an asset placed in service during the current year having an entry of 97 in Method, an entry of amortization in Category, or an entry in Amortization code section.
• Accumulated amortization
  • The program bases its calculation on the entry in Current year book amortization (Ctrl+T or amount) on the Balance Sheet Miscellaneous screen.
  • If this is left blank, the program uses federal tax amortization to calculate the ending balance of accumulated amortization. The current year amortization is calculated is added to Less accumulated depletion * (Beginning column) on the Balance Sheet screen to arrive at the ending amount.

• Federal tax payable
  • If the box Accrue federal tax is checked on the Miscellaenous Information screen, the program adjusts the entry made in Federal tax payable on the Balance Sheet screen based on the outcome of the tax return. If not accruing federal income tax, the amount enter in Federal tax payable carries to Schedule L, and isn't adjusted.
• State tax payable
  • If the box labeled Accrue state option 1 or Accrue state option 2 is checked on the Miscellaneous Information screen, the program adjusts the entry made in Ending - State tax payable on the Balance Sheet screen based on outcome of the tax return. If not accruing state income tax, the amount entered in Ending - State tax payable carries to Schedule L, line 18 and isn't adjusted.
• Ending retained earnings
  • The program calculates ending retained Earnings on Schedule L, line 24 in the following manner:

Beginning retained earnings, Sch. L, Line 24, column (b):

+ Net income per books, Schedule M-1, Line 1
+ Additions to Other retained earnings (Screen 32, code 114)
+ AAA Other additions to carry to Sch. L (Screen 32, code 105)
- Distributions from AAA, Schedule M-2, Line 7, column (a)
- Distributions from OAA, Schedule M-2, Line 7, column (b)
- Distributions from PTI, Schedule M-2, Line 7, column (c)
- Dividend Distributions from accumulated E&P, Sch. K, Line 22
- Distributions in excess of Schedule M-2/E&P accounts
- Reductions to Other retained earnings (Screen 32, code 115)
- AAA Other reductions to carry to Sch. L (Screen 32, code 106)
= Ending Retained Earnings, Sch. L, Line 24, column (d)

Entries made in Other additions and Other reductions in the Accumulated Adjustments Account (Schedule M-2) section of the Schedule M-2 screen don't automatically carry to Ending Retained Earnings on Schedule L. The AAA isn't a reconciliation of beginning to ending retained earnings. Amounts entered in Amount of Other Additions to carry to Schedule L and Amount of Other Reductions to carry to Schedule L on this screen will be included in calculating ending retained earnings.

If the total ending balance of Schedule M-2 doesn't equal the ending balance of Retained Earnings on Schedule L, the program automatically generates a worksheet reconciling the difference between Schedule M-2 and Schedule L. The ending retained earnings can be overridden in Total retained earnings [Override] (Ending column) on the Balance Sheet screen.