Adjust Opening Balances 6400 QuickBooks Pro Plus Desktop 2022

QuickBooks Pro Plus desktop 2020. To adjust opening balances, get ready because we bookkeeping pros are moving up the hill top with QuickBooks Pro Plus desktop 2022. Here we are in our get great guitars practice file going through the setup process with a view drop down the open windows list on the left hand side company dropped down home page in the middle maximizing that homepage to the gray area.


Opening up our reports with the reports drop down company and financial take a look at that balance sheet standard report customizing it up top. Let’s start off with a date range of 101 to one to 1231 to one, change those fonts and the numbers change in that font size to 14. Okay, yes, please. And okay, let’s do the same with the P and L Report reports drop down company and financial profit and loss standard change the dates from a 101 to one to 1231 to one customizing that report for the fonts and the numbers change in that font size to 14 and okay. And yes, please.



Okay, trial balance. Let’s do that one, two reports. Drop down accounting and taxes good look at the trusty TB Trial Balance changing the date range from a 101 to 112 31 to one customizing that report up top fonts and numbers change in that font size to 1414 is what we want there. Okay. Yes, please. And okay. So there we have it. So now we’ve last time we entered our data from our beginning balances. We’ve been doing this for quite some time now into the system.



And now we’re stuck down here, we’ve got this equity account at the bottom. And when when we entered everything into the system, because we entered it one account at a time, then QuickBooks did whatever it needed to do with the other accounts. In other words, when I hit the checking account, it put the other side into what they called Opening Balance equity accounts receivable and put the other side into some random income account.



The inventory put the other side into I believe the opening balance accumulated depreciation and the furniture and fixture opening balance equity accounts payable and put the other side into some random expense account. And then the VSA put the other side into opening balance. Same with the loan payable. So now my total equity is correct. But it’s in kind of like the wrong account. So let’s just recap that one more time. If I go back on over here, and I look at the prior period, the prior year that we are looking at, we’ve got this opening balance account, which isn’t a real account.



So I need to fix that because that’s not like the normal account that the we’re going to roll into, which would be a retained earnings or equity account or capital account, depending on for a corporation or sole proprietor or partnership. And then down here we got these random income accounts and expense accounts that they set up as well. Now, we’re not concerned with these two down below in our case, given the fact that we entered them as of the last year. So if I change the date range up top from Oh 101 to two to 1231 to two, those then disappear.



And we’re left with that equity account. The equity account is the account that QuickBooks is using as the account that as we can see the income statement is rolling into. So that amount, that’s the account we really want to be using. The opening balance equity account is the account that QuickBooks is saying, hey, look, we dumped everything into this account when you set up the file.



And we’re calling it opening balance equity to tell you that’s what we did in essence, because that’s not a real account name that you really want. So what we need to do now is say, Okay, now I’m just going to adjust everything out of opening balance equity, into the owner’s equity account here. So that we have that one account, that would be what we would need to do in the event that we are sole proprietorship. And we just have one account like a capital account or something, or we can call it just what we call it here owner’s equity account equity account.



Now if it’s a partnership, then we’d have a little bit more complexity, we’d have to then adjust from that one account to the two accounts that are going to represent, you know, the partnership interest in the business. So in that instance, you might have one account representing where QuickBooks is going to roll in the net income to and then basically break that out into the two or more partnerships. And you would have to do that generally periodically, in alignment with the partnership and so on.



And then on a corporation, you might have retained earnings, that represents the accumulation of the earnings just like the capital account here, but it’s usually pretty easy in that case, because then that that one account represents a breakout between all the owners, which are just in the format of shareholders, the shares determining the claim to the assets in the form of the equity and then you got that cap the equity account form the capital, or the common stock that you would need to break out in general. So that’s the general idea here.



Now, how can we do that? Also just realize that you might be saying, well, what if I started this in the middle of the year or something. And for whatever reason, I want these beginning balance numbers to be posted not to the income statement, but be posted right to the equity account. In other words, if I bring this back to Oh, 101, to one to 1231, to one, like, you don’t want these Uncategorized items down below, for whatever reason, then you could do a journal entry to fix that as well and adjust those accounts to the opening balance equity account as well, if you chose to do so. So let’s first think about the situation here, we’re gonna say,



Oh, 101, to two to 1231, to two, and just, we’re just gonna, we’re just going to remove the items from opening balance, and we’re going to put them into the equity account. Now, this isn’t a normal transaction, there’s not a normal form to do that, meaning if I go to the homepage, these icons represent normal processes that then create journal entries, there is no normal process to adjust opening balance equity, because it only happens at the start of the business. Therefore, you would think that you would just go right to a journal entry. So if you know debits and credits, your your instincts would probably be saying, Alright, I’m just gonna go company.



And I’m going to go down here and make a journal entry to hit the debits and credits. And you could do that you could go right there. Or if you’d rather use the registers, which will still create a journal entry, that might be an easier way to go. So let’s practice that. And so QuickBooks has registers not just for the check register checking account, but any balance sheet accounts. So in other words, if I go back to the trial balance, these these two accounts are both balance sheet accounts that will have registers, I can’t use the owner’s equity, however, as easily with a register, because that’s the account that QuickBooks uses to close out the income statements.



So what I could do is go into this register, and zero that out and put the other side to equity. That’s probably the you know, the easiest way to do it with the registers. So how do you do that when go to the list, strop down, let me let me jot down what that number is, it’s 72 72396. Okay, so then I’m going to go to the list strop down, and go to the chart of the accounts. And then notice that all these accounts that are balance sheet accounts have an amount in them. And that means they have a register for them. So in other words, if I was to go into opening balance equity and double click on it, it gives me a register, which looks a lot like you might expect to see with a checking account. But now you got to realize I’m in the register,



not of the checking account. But of that opening balance equity, we can see all the transactions that have been put in place, we see the balance out that 72 396, which means I didn’t need to jot it down, it’s right there. And what I want to do is I want to make that go to zero. So I’m just going to do the same date, which is going to be 1231 21. And we’re just going to decrease it to zero by credit by decreasing it by the 72 396. And then the other side needs to go somewhere, which is going to go to the equity account. So we’re just going to net it out to equity, owner’s equity right there. It’s an equity type of account.



And then we’ll just going to save, we could put a memo to adjust the beginning balances or something like that, it’s going to say, hey, look, you’re hitting a retained earnings type of account, the equity account, we don’t normally recommend that. But this is the first time to set it up. And we’re gonna say thank you for reminding me of that. But I’m confident I feel like we know what we’re doing here. I hope, I hope so that takes it down to zero. That looks proper. Let’s go back on over and say, Let’s go to the to the trial balance, check it out. So there it is, it’s been zeroed out now. And now we’ve got the 77 896 just in the credit side, that should match out to now our trial balance. If we just look at the trusty TB, there it is.



That’s what we wanted. That’s what we wanted. That’s what we wanted these to look correct the 15,000 to 1000 to 22. And then this 77 896. Now in owner’s equity, and we don’t have that ugly opening balance equity account, it’s now been zeroed out. You can also see that on the balance sheet if I go to the balance sheet, and we were to refresh this item. So let’s we refresh it. It’s already refreshed, doesn’t automatically and we go down here, then we got the net income right now, as of the end rolling in. If I change that to 2022. It all just rolls in to the equity and now we’re good to go as of the beginning.



This is at the end but it would be the same as the beginning if it was a 101 to two. There it is we’re good to go from that point. Starting the income statement from that point. Our income statement has not changed, meaning we have this stuff in there. From the last year, but in the current year, oh 101 to two to 1231 to two, there’s nothing in there. Now, again, you might say, hey, look, I don’t want for whatever reason, oh, 10121201, let’s say 1230 121, that you don’t want these items in the income area. And you could adjust them out. If I double click on it, you’re gonna say,



Okay, there’s, there’s the accounts receivable that went to the uncategorized income. So you could like double click on this, and obviously, it used basically an invoice to create these. And that’s why basically, it was kind of forced to take it to that, to that account of the opening balance equity account. So you could you could then make a journal entry, that would be reducing these accounts, right, you could say, Okay, I don’t want that in there as of that date.



So I’m going to go, I’m going to go up and make a journal entry, which would be in the company drop down, and then make a journal entry, which would be removing it from Uncategorized income, and then putting it directly into the equity section.



So you could, you could do that, but it’s not really necessary, generally, most of the time, because again, I don’t really care what happened prior to my cutoff date, because that information is going to roll into the equity account. So I’ll leave that basically as is. And then on the balance sheet. Note, again, we’re in a sole proprietorship. So we got this one number here at the 77 896. If it were a partnership, then you’d have two or more accounts representing the partners interest in the assets.



And typically you would have to then you what you would generally do is try to figure out, Okay, what’s equity in total? And then what what has the income be been periodically? And then how do I allocate that according to the partnership agreements, to the equity accounts, and you would typically have to do make adjusting entries. To do that. Oftentimes, if you have a fairly, you know, that would generally be the case. And then for a corporation, then again, you might have on the most basic level, you’d have the retained earnings, this account would just be called retained earnings. And then you’d have to break out the common stock portion.



And then you could break out that portion. If you have other things like preferred stock, and so on treasury stock and whatnot, then you can break that out with again, journal entries, but the idea here is that the total equity is going to be correct by just entering all other balances. And then within the equity accounts, you can then make the adjustments to figure out how you want the equity account to look. And noting that as you make those adjustments, QuickBooks will generally have this one account, which you could call owner’s equity or capital or retained earnings that will be used to close out the income statement automatically to it.



So when you’re trying to break out your equity section, if it was more complex to partners holdings, or to a corporation, then you want to make sure that you understand which account is the account that’s going to be used for QuickBooks to automatically close out two and how you’re going to make periodic adjustments to make sure that your equity is then allocated within the equity section properly.

Leave a Reply

Your email address will not be published. Required fields are marked *