Hi,
I have an existing business with proper accounting procedure and I have my trial balance in order. Now I want to start using manager but my challenge is how to entre my opening balances for income and expenses accounts. Balance sheet accounts are alright. Please help.
Setting up opening balances for income and expense accounts over-complicates things and Manager doesn’t support this (and never will).
If you want to start on Manager in the middle of the financial year, then for that year, you won’t be able to produce P&L for the whole year. You will need to take P&L from previous accounting system (e.g. first 6 months) and then P&L from Manager (e.g. last 6 months) and combine those figures yourself.
Then next year since it will be full on Manager, you can get P&L for the whole year.
Other option is to ignore whatever was done in the previous accounting system this financial year and set Manager to start at the beginning of this financial year and re-enter your records in Manager. This is actually what most people prefer to do anyway so they have full year in Manager even if they start using Manager 3 months into new financial year.
You can enter all the accounts from the trial balance as a journal entry instead of only entering assets and liabilities. Its quite simple and your accountant can help you if required.
Lubos
I am very thankful for your quick and kind reply but please what of using journal entries to enter them as suggested by Tony? Is it a good option?
It is an option, but would suggest that you do at a month end, rather then the middle of the month.
Tony,
For my income accounts like sales, which other account should I post to if I want to use journal entry to record sales opening balance? You know that journal involves two accounts.
Thanks.
Yes I understand Tony but my question is for instance which account do I
credit and which account do I debit while entering the opening balances of
my revenue accounts and also my expenses accounts. I do not need to call my
accountant, I can do it very well once I get this information.
Thanks.
Opening journal entries against income and expense accounts would have to be balanced against Retained earnings if a corporation or a partnership, or Owner's equity if a sole trader/proprietor. These entries would have to made after the opening balance of whichever equity account is used has been set to match the closing balance from the former accounting program.
Tut,
Thank you so much. That is very good but please I still need more help. I have done that but the journal entries do not reflect in the respective accounts that I posted them. For instnce I passed journal entries to income account and retained earning accounts but they do not show in the summary, Please what am I doing wrongly and how do I correct it?
What date did you put on the Journal, if your Start Date is Jul 1, then your Journal needs to be Jul 1 not Jun 30. Also your Summary tab - Set Period would be Jul 1
I am really so sorry if I am disturbing. I have done just as you said but they do not show.
If you do any Journal - make one up - as of todays date does that one show ?
Yes, the Income account has shown but that of retained earning did not show.
@Umeadi_Nnadi, are you using accrual or cash basis accounting?
Tut
I am using accrual basis.
By telling me you are using accrual basis accounting, you eliminated a potential problem I thought you might have. Since that wasn’t it, I don’t have enough information to help you further. @Brucanna was more involved with your question than I was, and I think it will be less confusing if I back away and let him help you if he can. Sorry I couldn’t be more helpful.
Alright thanks a lot.
Is this an answer to the - make one up - Journal as requested - as that is unclear in the response.
That would indicate then that in the BS Equity section you would have an account called Suspense showing a balance - is this correct, if yes, then there is a problem with the Journal, if no, then the Journal must have worked OK
If you did do a - make one up - Journal, record the balance figures for the income and retained earnings accounts. Now delete that Journal and record the balance figures again - have they both changed (by the same amount)