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William Ellis, CPA
William Ellis, CPA, CPA
Category: Tax
Satisfied Customers: 296
Experience:  Over 15 years of experience in public accounting
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I have a new client that recently switched over to me and now

Customer Question

I have a new client that recently switched over to me and now he wants me to do his 2009 C Corp Tax return 1120. He gave me a copy of his 2008 return which was prepared by someone else. He also gave me a copy of his books. Looking at his books, his balance sheet per the tax return doesn’t match the balance sheet per books. I know that I will have to adjust his books to agree with the tax return. I am having problems with these journal entries since they are different from the regular end of the period adjusting entries. For example: The cash on hand per tax return is 6400 and the cash on hand per books is 5000. Would the adjusting entry to match be Dr. Cash 1400 and Cr. Retained earnings? I am having a hard time deciding which account to credit. Another example is that automobile expense per tax return is 9400 and per books is 14,000. Would the adjusting entry to match be Dr. Auto Expense 4600 and Cr. Retained earnings 4600? Please let me know if I can do anything else to clarify this for you.
Submitted: 6 years ago.
Category: Tax
Expert:  William Ellis, CPA replied 6 years ago.
First of all, list all of the accounts down one page--or on Excel, showing the book totals of assets as positive, the liabilities and income as negative and the expenses as positive. The sum of the accounts should be zero. Then enter a column for the tax amounts. Find the differences and you've got the journal entry. Hope this helps, Bill.