I am importing a business from another accounting system.
I’ve been battling with this for few hours to no avail (I have read guides and other posts but still having issues), so I have to ask this basic question:
How do I import following Equity account balances into Manager (this comes from a 2018 balance sheet of a company; amounts rounded for simplicity):
Chequing account 1,000.00
Owner Investment / Drawings -10,000.00
Previous Year(s) Earnings 6,000.00
Current Year Earnings 5,000.00
Total equity 1,000.00
Edit (as per responses below): Starting date should be set as Jan 1, 2019 (note that I’m importing 2018 statements)
But, understand that your previous system’s equity structure seems questionable. It appears you are using a capital account structure, rather than a simple owner’s equity account. That’s fine. But you seem to have things mixed together that probably shouldn’t be. So it will probably be helpful to design your Manager equity structure first, then compute appropriate starting balances.
The balance of any capital account owner’s capital account should represent the amount that owner currently has invested in the business. That will be the net of all prior contributions plus distributed share of profit less drawings. For your example, this looks to be 1,000. So set the starting balance of your capital account to 1,000 Paid in advance. Subaccounts, like Drawings only come into play for capital account transactions, and do not appear in the chart of accounts. Therefore, they are not involved in setting starting balances.
The other equity account you will always have in Manager is Retained earnings, which is the net of all capital contributions, draws, receipts, and payments since inception. That will be where net profit resides until distributed to owners’ capital accounts. If you distributed all earnings to capital accounts under the prior system last year, Retained earnings will start at zero. But, if you left some earnings undistributed, enter that amount as the starting balance for Retained earnings.
If I understand the meaning of your equity structure, you should have two equity accounts with starting balances as follows:
If this is your case then your opening Equity account balances in Manager should be this
Capital Contribution -10,000.00
Retained Earnings 11,000.00
Giving you a net equity of 1,000.00
Manager, unlike your previous accounting system, only has an accumulative earnings account (Retained Earnings) not a opening earnings (Previous Year Earnings) plus Current Year Earnings setup which is a more traditional accounting approach.
@Brucanna, your interpretation may be correct. Because @clueless labeled the first line as Owner Investment / Drawings, I interpreted that to mean 10,000 had been drawn from the company in previous years. In turn, that implied profits had already been transferred from the previous equivalent of Retained earnings into a capital account and then paid out. Under those circumstances, Manager would have started 2019 with a zero balance for Retained earnings and 1,000 as a Capital accounts balance, as shown in my table above.
But I admit @clueless was not specific about this. If that prior distribution to capital accounts did not take place, your figures would be correct. And, of course, if only partial distribution occurred, the numbers would fall somewhere in between. This is why I warned @clueless to design the Manager equity structure first, then compute appropriate starting balances. Obviously, that design must take into consideration Manager’s inclusion of Retained earnings in all charts of accounts.