ProConnect HelpIntuit HelpIntuit

Ending balance sheet is out of balance on Form 1120

by Intuit Updated 3 months ago

If the ending balance sheet (Schedule L) is out of balance, please see the tips below.

Tips to resolve:

1. View the balance sheet on Form 1120, page 4 and determine which line(s) may be incorrect or causing the balance sheet to be out of balance. Some lines are input/output, while others the program automatically calculates unless an entry is made in a location specified further below.

2. The following items are automatically calculated by the program:

Assets

TypeLocationDetails
InventoriesIncome→Cost of Goods SoldAmount automatically flows from Cost of Goods Sold. If the amount is different from the cost of goods sold, enter the amount for the Balance Sheet in Ending - Inventories in the Balance Sheet Data Section.
Prepaid Federal TaxGeneral→Miscellaneous InformationIf the box is checked in Accrue Federal Tax, 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 do not automatically get included in this calculation and must be entered in the ending balance for prepaid tax.
Prepaid State TaxGeneral→Miscellaneous InformationIf the box is checked Accrue State Tax Option 1, 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.
Prepaid State Tax (cont.)General→Miscellaneous InformationIf the box is Accrue State Tax Option 2, the following 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 as well as make M-1 adjustments.
Buildings and Other Depreciable AssetsDeductions→DepreciationThe program will automatically add any assets placed in service in the current tax year in the Depreciation section to the amount entered in Beginning - 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 DepreciationBalance Sheet, M-1, M-2→Balance Sheet MiscellaneousThe program automatically enters accumulated depreciation on the balance sheet from assets in Depreciation section plus the amount entered for Beginning - Less Accumulated Depreciation 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 and entry is made in Current year book depreciation.
Depleted AssetsIncome→Oil and GasThe program automatically calculates the ending balance as follows: Beginning - Depletable assets plus current year change in depletable assets entered in Oil and Gas.
Less Accumulated DepletionBalance Sheet, M-1, M-2→Balance Sheet MiscellaneousThe program bases its calculation on the entry in Current Year Book Depletion. 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 Beginning - Less accumulated depletion to arrive at the ending amount.
Intangible AssetsBalance Sheet, M-1, M-2→Balance Sheet MiscellaneousThe program automatically calculates the ending balance as follows: Beginning - Intangible assets, plus current year change in intangible assets entered in Depreciation. For this calculation, an "intangible asset" entered in Depreciation 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.
Accumulated AmortizationBalance Sheet, M-1, M-2→Balance Sheet MiscellaneousThe program bases its calculation on the entry in Current Year Book Amortization. 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 Beginning - Less accumulated amortization to arrive at the ending amount.

Liabilities

TypeLocationDetails
Federal Tax PayableGeneral→Miscellaneous InformationIf the box is checked Accrue Federal Tax, the program adjusts the entry made in Federal tax payable based on the outcome of the tax return. If not accruing federal income tax, the amount entered in Federal tax payable  carries to Schedule L and is not adjusted.
State Tax PayableGeneral→Miscellaneous InformationIf the box is Accrue State Option 1 or Accrue State Option 2, the program adjusts the entry made in Ending - State tax payable  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 is not adjusted.
Ending Retained EarningsBalance Sheet, M-1, M-2→Balance Sheet MiscellaneousThis amount is calculated on the Schedule M-2 of Form 1120.  To override this calculation, enter the desired amount in Ending retained earnings (-1=none)[O].
ProConnect Tax Online

Sign in now for personalized help

Ask questions, get answers, and join our large community of Intuit Accountants users.

More like this

Dynamic AdsDynamic Ads