Balancing the General Ledger

 

Be sure that the beginning balance for the new month is correct. To ensure that the beginning balance is correct, print the check register for the prior month and compare the ending balance to the beginning balance on the journal listing. To print the check register from the Accounting>File>Banking>Add/Edit Checks. Click on the Print Register button.

Debits: Debits to the bank account come from deposits that are made. Deposits consist of deposits for receipts and miscellaneous deposits. (Deposits for income other than sales)

Credits: Credits to the bank account come from checks that were entered as hand checks, Accounts payable checks and payroll checks. Bank charges will also credit the bank account. You could have a negative credit that has comes from negative bank charges entered.

Common reasons the checking account is out of balance:

When posting a check, deposit or bank charges the user posted these entries back to checking account code. Doing this debits and credits the same account code so the net result is zero.

Checks that were written did not get posted to the General Ledger. Reasons for this:

The General Ledger was not activated (turned on) at the time the checks were written, so journal entries will have to be made to the journal to reflect these checks.

While printing the checks your hardware received a power surge or an error message that prevented RFMS from posting to the journal. Journal entries will have to be made to the journal to reflect these checks.

When discounting off a customer's balance in order entry, the user posted the discount to the bank account code.

Be sure that the beginning balance for the new month is correct. To ensure that the beginning balance is correct, print the month end report for AR for the prior month and compare the ending balance on the report to the beginning balance on the journal listing. To print the month end report for accounts receivable from the main menu of RFMS select #5 Accounting, #7 Month End Reports, #2 Accounts Receivable.

Debits: Debits to accounts receivable come from job costing. When you Job cost a job in order entry the system will debit AR, credit Sales, debit inventory, credit cost of materials and reverse any customer deposits.

Credits: Credits to accounts receivable come from receipts. Receipts are payments posted to the customer invoice at the time of payment.

Common reasons Accounts Receivable may be out of balance:

Check to make sure that there are no journal entries posted to this account. If so reverse the entry. Journal entries should not be posted directly to the AR account code.

Check to make sure there are no stray entries to this account that came from receipts. You will be able to tell this by looking in the comments column on the journal listing.

Check to make sure that each order entry record that was job costed in that month has a job cost record attached to the order.

Helpful Hints:

Receipts

Print the receipt report from Accounts receivable for the month and look for a dollar amount that matches the amount of monies that you are off. Then go to Order Entry and search for the record, to see if there is a job costed record attached. If not un-job cost the order and re-job cost to create the job cost record.

Job cost Records

You may have a missing job cost record. To find a missing job cost record, go to the Utilities menu in Accounting, Sales Utilities, and print Header Check Report. Make sure you choose Job Cost on the Print Screen.  Then go to Sales Report module.  Go to File>Profitability>Job Cost Analysis and print report for the same time period.   Be sure to print this report in detail. Compare the two reports. Look for invoice numbers that are on the Header Check Report that are not on the Job Cost Analysis Report. If you find a missing job cost record, go to the order in Order Entry and un-job cost the order and re-job cost it.

Header Records

Missing header records in Order Entry can cause an out of balance in accounts receivable. To find a missing header record, go to Sales Analysis (Windows). Print the Jobcost Analysis Report in summary form and then print it again in detail. Compare the delivered sales (Invoice Totals Including Labor) on the summary report with the Invoice Total column on the detail report. If these two numbers do not match you have a missing header record.

To find a missing header record print the commission history report for the same time period. From the Accounting main menu, click on File, Sales Commissions, Print Commission History. Compare the invoice numbers on the commission history report to the invoice numbers listed on the Job cost Analysis Report. You should be able to find invoice numbers on the commission history report that are not on the Job cost Analysis Report.

To fix the missing header problem go to Order Entry and enter in a new header record (customer order). IMPORTANT - Make sure that you enter in the original store code, job type and salesperson. Do not enter any money in the header record; do not add any lines, the lines and the receipts will automatically re-attach to the order. The balance on the customer may need to be edited through the Utilities menu. You will need to get an access code from RFMS support to allow entry into the fix customer order option.

Print out the job cost analysis report in detail and be sure to include job costed and un-job costed record, check for any invoices that have more than one un-job costed record. For example the report may have one invoice that has a job costed status and two un-job costed statuses. In this case you will need an access code to delete one of the un-job costed records. You may also have two job costed records for the same invoice, delete one of the job costed records.

Check to see if your invoices in Order Entry with an overage or an add-on dated in a different month than the invoice header and the delivery or job cost date is dated in the same month as the invoice header.

Common reasons Accounts Payable may be out of balance:

If the beginning balance matched the month end report for the prior month check to make sure there are no journal entries or miss posting to this account. If you do have journal entries reverse the entry. If you have a miss posting to this account do a journal entry to correct or you may edit the payable and change the account code. If the entry came from a receipt you may not edit the receipt you will have to do a journal entry to fix.

Check the month end report for A/P. You will get three reports when you print the month end report.

One will be A/P posted to A/P in that month whether they have been Paid or not.

A listing of all accounts payable still open by G/L account code.

A report by supplier for all invoices open (not yet paid).

Check to see that the A/P listing by G/L account code balance balances with the A/P listing by supplier. If they don’t balance, then compare the two reports for missing invoices on the A/P by G/L account report. Go toAccounting>Accounts Payable>Add/Edit Payables and search for the A/P record. Here you will find that the A/P has no journal distribution. Edit the record and enter in the correct G/L account code. If the system will not let you edit the A/P record, call RFMS to obtain an access code to use the utilities menu, A/P Edit routine.

Once you have fixed the Accounts payable records, stay in the utilities menu and select recreate A/P subsidiary. You will need to get an access code from RFMS support to run this routine. *Running this routine may or may not post these entries to the journal especially if they have already been paid. If they do not you will have to do a journal entry to record the entry.

Check the posting for your AP check runs. For example in the journal you will see check numbers 100 - 150 posted. Add all the entries that appear on the journal together. You will now want to go to Accounts Payable, AP Reports, and Select # 3 AP paid by account or check. Print the report for the range of checks and compare it to what the journal says. If the two reports do not match you may need to do a journal entry.

Check to make sure that the beginning balance was in balance.

Debits: Debits to inventory come from AP posted.

Credits: Credit to inventory come from jobcost and or inventory adjustments.

Common reasons Inventory may be out of balance:

If the beginning balance matched the month end report for the prior month check to make sure there are no journal entries or miss posting to this account. . If you do have journal entries reverse the entry.

Are you costing your inventory? The costing routine in RFMS is very important. This process allows you to be sure that the value of the inventory that is posted to the inventory file is the same value that is posted to the accounts payable file. Remember – General Ledger gets its information from accounts payable.

Example of what happens if you are not costing your inventory:

Inventory is brought in through a bill of lading with a value of $1.00. Supplier invoice is received and posted directly to the account payable module, bypassing the costing routine. The value of the payable is $1.10. RFMS has just posted a debit to the general ledger of $1.10. Inventory is sold through order entry and job costed. RFMS uses the cost that is on the inventory record at the time of job costing. When the record is job costed RFMS credited the inventory account with a value of $1.00. So you can see that we are out of balance by .10 cents.

Are you changing the cost in inventory after posting the AP record? If so, are you posting the adjustment to the General Ledger?

Example of what happens if you are not posting your adjustments to general ledger.

Inventory is brought in and costed, accounts payable record is posted, and general ledger is updated. All is well. Then you decide to reduce or increase the cost of inventory by editing the roll record and changing the cost. This adjustment needs to be posted to the general ledger at month end. The reason why is because the general ledger still has the value from accounts payable, and when you assign the inventory to a job RFMS is picking up the cost that is currently on the roll record. So you see if you do this you will be out of balance.

Are you entering inventory returned from jobs and not posting an accounts payable invoice for them? Lets say that you have a large job in process, you send out 1000 ft of carpet and charge your customer for 1000 ft of carpet. The job only took 930 ft to complete. You bring the 70-ft roll back into your warehouse but you did not adjust the customer's invoice because they are paying for entire roll. If this scenario applies to your company then you need to utilize the Return/Found Inventory function in Inventory.

Are jobcosting your customer invoices before you cost the inventory records? If so, you may be crediting inventory in the General Ledger with a lower or higher cost that actually posted to the General Ledger from the Accounts Payable record. There is An option in RFMS that will prevent  job costing invoices with inventory assigned to it that has not been costed.  Set >Utilities>System Options>Order Entry>Order Entry>Job Cost not costed Inventory to no.

Allowing Job cost Not Costed Inventory

Utilities>System Options>Order Entry>Order Entry> Job Cost "Not Costed" Inventory

This feature is available for Non-ERRM clients only.

If this option is set to yes the system does not do date comparison on the job cost date and the invoice date on your inventory record. It is assumed that you do not wish to check those dates.
If the option is not checked, the system compares the invoice date on the inventory record to the job cost date.  The invoice date on the inventory record has to be equal to or less than the job cost date before you can job cost the order.

If you decide this is not what you want to do, RFMS will give you a warning at the time of costing inventory that this inventory record has been assigned to a customers order and job costed. You will then have to go to order entry, search for the job, un-job cost it, un-assign the line, and re-assign the line so it will pick up the correct cost for job costing, re-job cost the job.

Where are you posting your credit memos from the mill? Credit memos from the mill should not be posted to the inventory General Ledger account code, they should be posted to cost of materials.

Are you size adjusting rolls before you cost them? If so, when you size adjust a roll that has not been costed, the system does not create an adjustment record for it. When you cost the roll the system is costing the amount received not the amount available. A journal entry needs to be made to reflect the size adjustment.

Sales Tax Payable – This account is a liability account. This account is debited from accounts payable records posted. This account is credited by a journal entry at the end of the month. When an accounts payable record is posted to satisfy your sales and use tax liability the normal entry on the accounts payable record would be sales tax payable. At the end of the month when you close the journal, you are prompted to enter your sales tax liability number. Once you enter this number in the field specified the system would make the journal entry for you. The entry will be a credit to sales tax payable and a debit to sales tax expense.

Sales Tax Expense – This account is a contra sales account. The account is debited at month end when closing the journal and you enter in a sales tax liability number. Once you enter this number in the field specified the system would make the journal entry for you. The entry will be a credit to sales tax payable and a debit to sales tax expense.

Debits – The Customer Deposit account is debited when a job has been job costed after monies have been received on it. When the job is job costed RFMS will reclassify the customer deposit and post the entry to accounts receivable.

Credits – The Customer Deposit account is credited by receipts generated from customer orders that have not been job costed. To print the customer deposits report: From the Accounting main menu, click on File, Month End, A/R Reports, check the box labeled Print Customer Deposit Report.

To get the the journal amount, add the disc amt. and Customer Deposit amounts from the Month End Report.

Common reasons Customer Deposits may be out of balance:

Check to make sure that the beginning balance was in balance. Print the month end report for the prior month and compare the ending balance on the report to the beginning balance for the new month, these two should match.

Are there any stray entries in the account such as journal entries, receipts posted to this account?

Asset Accounts

Asset accounts have a normal debit balance. This means, when an asset account is debited the account balance is increased. When an asset account is credited the account balance is decreased. The normal entries to these accounts come from various different files from your RFMS system. Checking account and savings account entries come from activity that was posted to bank transactions during the month. Checks, deposits, bank charges and transfers. Accounts Receivable entries come from jobcosting in order entry and receipts from customer orders. Inventory entries come from accounts payable posted, jobcosting in order entry and inventory adjustments. All other asset account entries come from accounts payable posted, bank charges, miscellaneous deposits or journal entries made by the user.

Liability Accounts:

Liability accounts have a normal credit balance. This means, when a liability account is credited the account balance increases. When a liability account is debited the account balance is decreased. The normal entries to these accounts come from various different files from your RFMS system. Accounts payable credit entries come from accounts payable posted. Debit entries come from accounts payable checks written. Customer deposit credit entries come from receipts posted to a customers order before the job costing function has been performed. Debit entries come from re-classified entries that your RFMS system creates when the order in order entry is job costed after a payment has been applied. All other liability account entries come from accounts payable posted, bank charges, miscellaneous deposits or journal entries made by the user.

Capitol Accounts:

Capitol accounts have a normal credit balance. This means, when a capitol account is credited the account balance increases. When a liability account is debited the account balance decreases. The normal entries to these accounts come from various different files from your RFMS system. Retained earnings account code is credited or debited at year-end by your RFMS system. When the year-end procedure has been performed though the general ledger menu, RFMS will zero out all the sales income and expense accounts and post the remainder to your retained earnings account code. (Profit or loss) All other capitol account entries come from accounts payable posted, bank charges, miscellaneous deposits or journal entries made by the user.

Sales Accounts:

Sales accounts have a normal credit balance. This means, when a sales account is credited the account balance increases. When a sales account is debited the account balance decreases. The normal entries to these accounts come from various different files from your RFMS system. Sales account code is credited by job costing orders in Order Entry. To verify this number, print the job cost analysis report. From the Accounting main menu, click on Navigator, Sales Analysis. From the Sales Analysis main menu, click on File, Job cost Analysis. Print this report for the month that you working with. Sales tax expense account code is a contra sales account. This account will have a normal debit balance. This account is debited at month end when closing the journal and you enter in a sales tax liability number. Once you enter this number in the field specified the system will make the journal entry for you. The entry will be a credit to sales tax payable and a debit to sales tax expense. Entries to this account may also come from Accounts payable posted. Discounts to customers have a normal debit balance. Entries to this account come from discounts applied to a customer order in order entry. Entries to this account may also come from accounts payable posted, bank charges and miscellaneous deposits.

Cost Of Sales:

Cost of sales accounts have a normal debit balance. This means, when a cost of sale account is debited the account balance is increased. When a cost of sale account is credited the account balance is decreased. The normal entries to these accounts come from various different files from your RFMS system. Cost of material account is debited when jobs in order entry are job costed. To verify the amount in this account, print the job cost analysis report. From the Accounting main menu, click on Navigator, Sales Analysis. From the Sales Analysis main menu, click on File, Job cost Analysis. Print this report for the month you are closing. Installation or installers wages account is debited from accounts payable posted or payroll depending on how you pay your installers. If you pay your installers though payroll print the GL Distribution Summary Report. To print the report from the Accounting main menu, click on File, Human Resources. From the Human Resources main menu, click on Reports, Pay History Report. Print for All workers, Start date will be the beginning of the month you are closing, stop date will be the end of the month you closing. Reports Desired: click on the Print the GL distribution summary report option. If you pay your installers from accounts payable, print the AP Posted by Account Code report. From the Accounting main menu, click on File, Accounts Payable, A/P Reports, A/P Entered by Account. Entries to these accounts may also come from bank charges, miscellaneous deposits and receipts posted to customer orders for discounts.

Expense Accounts:

Expense accounts have a normal debit balance. This means, when an expense account is debited the account balance is increased. When an expense account is credited the account balance is decreased. The normal entries to these accounts come from various different files from your RFMS system. Expense accounts are debited from Accounts Payable posted. To verify an amount that is posted to the journal for an expense account: print the accounts payable report posted by account code. From the Accounting main menu, click on File, Accounts Payable, A/P Reports, A/P Entered by Account. Entries to these accounts may also come from bank charges, miscellaneous deposits or customer receipts for discounts. Salary accounts have a normal debit balance. To verify the amounts in this account print the journal distribution report in payroll. From the Accounting main menu, click on File, Human Resources. From the Human Resources main menu, click on Reports, Pay History Reports. Select the option to print for all workers, Start date will be the beginning of the month you are closing, stop date will be the end of the month you closing. Select the option to print G/L Distribution Summary Report.

Miscellaneous Income:

Miscellaneous income accounts have a normal credit balance. The means, when a miscellaneous income account is credited the balance of the account is increased. When a miscellaneous income account is debited the account balance is decreased. The normal entries to these accounts come from various different files from your RFMS system. Finance charge income account is credited when finance charges have been applied to customer orders. Debits to finance charge income come from receipts. A debit is posted to the finance income account when a discount is applied to the customer order for non-payment of finance charges. The debit to this account will only be posted if the user changed the GL account to finance charge income at the time of posting the discount. Interest income account is credited when the user posts a deposit in bank transactions for interest received.