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

• 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 in Screen 3, Miscellaneous Information
• 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 in Screen 3, Miscellaneous Information
• 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 Screen 14, Cost of Goods Sold (1125-A).
  • 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 in Screen 29, Balance Sheet.
• Prepaid federal tax - If the box Accrue federal tax is selected in Screen 3.1, Miscellaneous Information, Lacerte 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 in Screen 3.1, Miscellaneous Information, Lacerte 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 - Lacerte will automatically add any assets placed in service in the current tax year in Screen 16, Depreciation (4562) to the amount entered in Screen 29, Balance Sheet, 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 - Lacerte automatically enters accumulated depreciation on the balance sheet from assets in Screen 16, Depreciation (4562) plus the amount entered for Less accumulated depreciation in the beginning column of Screen 29, Balance Sheet, 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 Screen 30, Balance Sheet Miscellaneous.
• Depletable assets - Lacerte automatically calculates the ending balance as follows: Depletable assets, beginning column on Screen 29, Balance Sheet, plus current year change in depletable assets entered in Screen 19, Oil and Gas.

• Less accumulated depletion - The program bases its calculation on the entry in Current year book depletion (Ctrl+T or amount) on Screen 30, Balance Sheet Miscellaneous.
  • 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 Screen 29, Balance Sheet to arrive at the ending amount.
• Land (net of any amortization) - For this calculation, land entered in Screen 16, Depreciation (4562) 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 Screen 16, Depreciation (4562) 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 - Lacerte automatically calculates the ending balance as follows: Intangible assets (beginning) on Screen 29, Balance Sheet plus current year change in intangible assets entered in Depreciation (Screen 16, Depreciation (4562)).
  • For this calculation, an intangible asset entered in Screen 16 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 (Screen 16, Code 17).
• Accumulated amortization - Lacerte bases its calculation on the entry in Current Year Book Amortization (Ctrl+T or Amount) (Screen 30, code 3).
  • 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 amortization (beginning) on Screen 29, Balance Sheet to arrive at the ending amount.

• Federal tax payable - If the box Accrue federal tax (Screen 3, code 11) is checked, the program adjusts the entry made in Federal tax payable (Screen 29, code 253) based on the outcome of the tax return. If not accruing federal income tax, the amount enter in Federal tax payable (Screen 29, code 253) carries to Schedule L, and isn't adjusted.
• State tax payable - If the box is Accrue state option 1 (Screen 3.1, Code 50) or Accrue state option 2 (Screen 3.1, code 51), the program adjusts the entry made in Ending - State tax payable (Screen 29, code 254) based on outcome of the tax return. If not accruing state income tax, the amount entered in Ending - State tax payable (Screen 29, code 254) carries to Schedule L, line 18 and isn't adjusted.
• Ending retained earnings - Lacerte 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 to the Accumulated Adjustment Account (Screen 32, codes 102 and 103) 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 (Screen 32, code 105) and Amount of other reductions to carry to the Schedule L (Screen 32, code 106) 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 Ending - Total retained earnings [O] (Screen 29, code 266).