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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 to make a journal entry to fix retained earnings to

Customer Question

I have to make a journal entry to fix retained earnings to balance to what was reported on the tax return. It is a prior period adjustment.

The credit will be to retained earnings. What is the debit to? Income SUmmary?
Submitted: 6 years ago.
Category: Tax
Expert:  William Ellis, CPA replied 6 years ago.

William Ellis, CPA :

Retained earnings can't be the only balance that's different. What else is different on the tax return? Thanks, Bill

Customer:

cash- but its only off by $4

Customer:

is there a way just to fix retained earnings?

William Ellis, CPA :

There may be if an income or expense account is the reason for the difference. If another balance sheet account is different, then simply adjusting retained earnings does not correct that account. Are a lot of accounts different? Thanks, Bill.

William Ellis, CPA :

I answered you yesterday, too. This is what I wrote then for figuring out the journal entry: 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.