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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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I am trying to help reconcile a tax return from 2007- they

Customer Question

I am trying to help reconcile a tax return from 2007- they have a balance of retained earnings of -484474 and the difference in gross receipts between their income statement and their TR is $483498. Could this be a part of the difference?
Submitted: 5 months ago.
Category: Tax
Expert:  Mark Taylor replied 5 months ago.

Hi, my name is Mark. I will be happy to help you with your questions.

Expert:  Mark Taylor replied 5 months ago.

Where the difference between the two are so close, this looks like it is a large part of the difference.

Customer: replied 5 months ago.
how would I state this on the reconcile chart? negative retained earnings?
Expert:  Mark Taylor replied 5 months ago.

I am assuming the Gross Receipts were higher in QuickBooks?

Expert:  Mark Taylor replied 5 months ago.

Does everything else on the balance sheet reconcile?

Expert:  Mark Taylor replied 5 months ago.

Does the net income tie to the balance sheet?

Customer: replied 5 months ago.
Sales totaled(###) ###-####with 53093 in bad debt leaving balance I am trying to reconcile from of $6974539 in sales
Customer: replied 5 months ago.
no balance sheets available per client
Expert:  Mark Taylor replied 5 months ago.

Sorry, does the net income tie to the tax return.

Expert:  Mark Taylor replied 5 months ago.

The balance sheet in QuickBooks.

Customer: replied 5 months ago.
I have asked for balance sheets- do not have as of yet.
Expert:  Mark Taylor replied 5 months ago.

It sounds like the prior account may have made adjusting entries that impacted the sales and that these entries were not recorded in QB.

Expert:  Mark Taylor replied 5 months ago.

On the tax return is their a liability for deferred income?

Customer: replied 5 months ago.
Schedule K1 : Shareholders Worksheet: end of year loan basis total 369945 - end of year stock and loan: $444119
Expert:  Mark Taylor replied 5 months ago.

It sounds like this is an S-Corporation.

Customer: replied 5 months ago.
1120S
Customer: replied 5 months ago.
M2: Balance beg yr -17181
Ordi. Income shareholder 49097
other reductions 5749
total 26167
Expert:  Mark Taylor replied 5 months ago.

The return is going to be impossible to reconcile until you have all of the information. You are going to need the company's income statement and balance sheet.

Customer: replied 5 months ago.
I have the accrual income statement for their year 2007.
Just trying to reconcile gross revenue to TR.
Expert:  Mark Taylor replied 5 months ago.

Once you have all the information, it will be easy for you to find the differences.

Expert:  Mark Taylor replied 5 months ago.

Ok, that is the one you mentioned that had a large difference in sales.

Expert:  Mark Taylor replied 5 months ago.

What kind of business does the company do?

Customer: replied 5 months ago.
does still sound like negative balance of retained earnings could play a part in this revenue difference that the prev CPA that is no longer available could have contributed based on the shareholder sch k1 worksheet and gross revenue from income stmt?
Customer: replied 5 months ago.
are sitting down? Car sales!
Expert:  Mark Taylor replied 5 months ago.

I do not know why there would be such a large adjustment to sales?

Customer: replied 5 months ago.
Exactly- me either unless money was loaned in payroll advances but not repaid? we did have to reconcile a payroll issues but mainly for yr 2008?
Expert:  Mark Taylor replied 5 months ago.

By reducing sales you would be decreasing the retained earning so I agree that this is a large part of the difference.

Expert:  Mark Taylor replied 5 months ago.

Was that your only difference in reconciling the income statement to the tax return?

Customer: replied 5 months ago.
no we have accrual to cash adjustments of 15k and bad debt of $53k
Customer: replied 5 months ago.
P&L accrual/ Tax Return Cash basis
Expert:  Mark Taylor replied 5 months ago.

Do all of your differences tie to the difference in retained earnings?

Expert:  Mark Taylor replied 5 months ago.

You also have the M-1 adjustments that you need to consider.

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