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Schedule L: Balance Sheet is Out of Balance Form 1065 1120S 1120 Or 990 Part X

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Intuit

Schedule L: Balance Sheet is Out of Balance Form 1065 1120S 1120 Or 990 Part X

Below are tips and common areas to review when the Schedule L is reported to be out of balance.
Forms 1065, 1120S, and 1120:
  • There is a correct order for completing a business return in ProSeries. It is important to complete the return in this order:
    1. Complete the rest of the tax return,
    2. Complete Schedule M-1,
    3. Complete Schedule M-2,
    4. Complete Schedule L
  • Check to make sure all the numbers have been entered correctly, with no transpositions.
  • Check your signs: make sure positive and negative amounts are entered correctly.
  • Make sure the source balance sheet (financial reports) are in balance.
  • Beginning balances are found on the previous year's tax return as ending balances in Schedule L, column (d), or if this is a new company, from the Financial Report Balance Sheets.
  • Make sure all assets in the balance sheet are listed as the book balance (Schedule L- Balance Sheet Per Books).
  • Beginning and ending inventory flow from Schedule A, Cost of Goods Sold.
  • Confirm accumulated depreciation on depreciable assets. Prior year's accumulated depreciation + Current year's depreciation expense = Total accumulated deprecation.
  • Retained earnings should include current year's book income or loss.

Form 990, Part X:

  • Check to make sure all the numbers have been entered correctly, with no transpositions.
  • Check your signs: make sure positive and negative amounts are entered correctly.
  • Make sure the source balance sheet (financial reports) are in balance.
  • Beginning balances are found on the previous year's tax return as ending balances in Schedule L, column (d), or if this is a new company, from the Financial Report Balance Sheets.
  • Retained earnings should include current year's book income or loss.

It is the responsibility of the tax preparer to ensure the accuracy of the financial information from the financial records.

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