Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.
First of all, let me explain how it should work, and perhaps you can figure out what you need to do by comparing that to what you actually did.
When switching from a sole proprietorship to a Husband/Wife Partnership, in terms of Quickbooks, the opening entry is used to record whatever assets and liabilities (if any) that you bring from the sole proprietorship to the partnership.
That entry would record your investment in the partnership and the closing balances of your sole proprietorship become the opening balances of the partnership.
So for example............let's say you had 1,000. in cash; 5,000. in Equipment & 1,000. in Accumulated Depreciation at the close of business in your proprietorship;
The entry to start the partnership would be:
Dr Cash 1,000.
Dr. Equipment 5,000.
Cr Accum Dep 1,000.
Cr Prt H Capital 2,500.
Cr Prt W Capital 2,500.
That would be your opening balance sheet.
Don't know why you would have the 2011 Accum Dep in Retained Earnings
If your quickbooks balance sheet is balanced, that's what you want to use to prepare your ending balance sheet on Turbo Tax; the ending balance sheet on turbo tax is supposed to be the balance per your books, not some other set of balances that you come up with just for tax purposes.
Thanks for responding. I don't have everything right in front of me right now to look and see how I have the opening balance set up in QB. I'll have that tomorrow morning. Regarding the 2011 accumulated depreciation being in retained earnings, I think it is in there because I entered the equipment using the date we purchased it in 2011 and I entered the 2011 accumulated depreciation with the date 12/31/2011. So, with regard to that, I'll change the date to 1/1/2012.
You don't bring on any balance to retained earnings; the Accumulated Depreciation is a balance sheet "contra asset account".
I did use the QB balance sheet to manually enter the information into TurboTax, but I am thinking that some of my issue is rooted in the opening balance sheet. I'll have to look at it tomorrow to see how it compares to your example above. Just to clarify. Are the entries above entered into QB using General Journal Entries?
Remember that the balance sheets are a reflection of the grouped account balances at a point in time. So if you have a "balanced" balance sheet at the beginning of the period, and all your transactions balance in quickbooks, then you have to balance at the end of whatever period you are dealing with.
The entry above you referred to would be the opening entry or opening balances of the accounts on 1/1/2012, depending upon how you chose to record them. You wouldn't have them as journal entries if you also have some kind of opening entry; that would create a duplication.
Ok, talk to you tomorrow.........................
Okay. I went into Chart of Accounts in QB and changed the opening balance in the account register to reflect what we brought into the partnership at the beginning of the year. I deleted the entries in the register dated 2011, so that I did not duplicate information. Now my P&L shows a depreciation expense of the depreciated equipment from 2011 and 2012, not just 2012. Is this correct? My balance sheet has changed in that it no longer shows the net income line. It shows retained earnings which equal the net income from the P&L. That is the only difference on the balance sheet.
When I went into TurboTax, the balance sheet only shows the depreciation from this year and it still is not balancing.
You probably booked the 2011 depreciation to the depreciation expense account rather than making it part of your opening entry, which would have credited accumulated depreciation.
Your accumulated depreciation account should have the 2011 & 2012 depreciation as a credit balance and the only expense in the depreciation expense account would be the 2012 depreciation.
Recheck your opening entry where you brought on the assets & see if you credited the accumulated depreciation account and nothing else to do with depreciation.
So when I go into the accumulated depreciation register, what account should I charge the 2011 depreciation to? In QB, when I try to change the opening balance entry, it puts me into the register for that account. Also, I just want to make sure this is accurate, accumulated depreciation should show up as a negative number, correct??
Okay, I just figured out that I should use opening balance equity in the account field for the accumulated depreciation account.
That should be both of your capital accounts.
Are you typing?
I'm about to sign off for the nite; it's 12:30AM here........................
I credited the cost of the equipment that we purchased in 2011 to our contributions accounts. I thought that is what you meant by your above example. I know that my balance sheet issue in TurboTax has to do with the 2011 depreciation and the cost of the equipment. I was able to balance all three categories in TurboTax: Income reconciliation, capital reconciliation and balance sheet by removing the equipment from my beginning of the year assets and by using the opening balance equity that is now in QB from when I changed the opening balance equity in the accumulated depreciation account.
Sounds ok to me; it is just that the opening balance equity is really divided in half to be reflected as your partner's capital accounts, one for each partner.
Now that the problem is isolated (I think...), I need to fix QB since that has to be an accurate reflection of our books.
Okay. It's late here too. I'll look at it again tomorrow. Maybe I'll be able to get it straightened out once I look at it again. Thanks!!!
ok, if I was there, we could fix it quickly; it is difficult this way.
I know. I appreciate everything you are doing to help!!
OK, good nite
Thanks. you too.