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How to enter an ending balance sheet on Form 1120S in ProConnect Tax

SOLVEDby IntuitProConnect Tax9Updated July 27, 2021

ProConnect Tax automatically calculates some lines of the Schedule L. You must directly enter other items on the Balance Sheet screen.

To view a Schedule L balance sheet:

  1. Go to the Check Return tab.
  2. Select Forms, US, then 1120S.
  3. Scroll to page 4 to view the Schedule L.

Walk through each item under Schedule L to see which item(s) are causing the imbalance. If you wish to change an item, see the list below for instructions.

Direct input items:

You must manually enter direct input items on the Balance Sheet screen; the program doesn't automatically calculate them for you.
Follow these steps to change any direct input item:

  1. Go to the Input Return tab.
  2. Select Balance Sheet, M-1, M-2, M-3, then Balance Sheet.
  3. Select Federal.
  4. Locate the line you wish to change, and enter the correct Ending balance.

Under Assets:

  • Cash
  • Accounts receivable
  • Less allowance for bad debts
  • Inventories (if different from COGS)
  • U.S. government obligations
  • Tax-exempt securities
  • Prepaid federal tax
  • Prepaid state tax
  • Prepaid city tax
  • Other current assets
  • Loans to shareholders
  • Mortgage and real estate loans
  • Other investments
  • Other assets

Under Liabilities and Equity:

  • Accounts payable
  • Mortgages, notes payable - current year
  • Federal tax payable
  • State tax payable
  • City tax payable
  • Other current liabilities
  • Loans from shareholders
  • Mortgages, notes payable - long term
  • Other liabilities
  • Capital stock
  • Additional paid-in capital
  • Total retained earnings [Override]
  • Adjustments to shareholder's equity
  • Less cost of treasury stock

Automatically calculated items:

Items the program automatically enters are marked with an asterisk (*) on the input screen if no entry is made.

Under Assets:

Inventories: calculated from entries on the Ordinary Income, Cost of Goods Sold (1125-A) screen.

Prepaid federal tax: if you selected the box on the GeneralMiscellaneous Information (Misc./Other Info.) screen to Accrue federal tax, the program will automatically calculate this line using your federal estimated tax payments and the amount of actual tax calculated on this year's return.

The calculation is based on your entries under Payments, Penalties & Extensions in the Estimated Tax screen, in the Overpayment applied from 20XX field, and any quarterly estimates you entered as paid.

For example, if you had a $400 overpayment on last year's return, and chose to apply all of that overpayment to this year's estimates. You also paid $100 estimated tax installments each quarter. This year's return calculates $700 current tax (on Form 1120S, line 22c). The program will calculate an ending, prepaid federal tax balance of $100.

If Accrue federal tax isn't selected, the program won't calculate this line, and you will need to enter an amount in the ending balance on the Balance Sheet, M-1, M-2, M-3, Federal screen.

Prepaid state tax: under the GeneralMiscellaneous Information (Misc./Other Info.) screen, if you select the box to Accrue state tax option 1, the program will automatically calculate this line using your state estimated tax payments and the amount of actual tax calculated on this year's return.

The calculation is based on entries in the Payments, Penalties & ExtensionsEstimated Tax screen, in the Overpayment applied from 20XX field, and any state quarterly estimates you entered as paid.

Under GeneralMiscellaneous Information (Misc./Other Info.) screen, If you select the box to Accrue state tax option 2, the program will automatically calculate this line using your state estimated tax payments and the amount of actual tax calculated on this year's return.

The calculation is based on entries in the Payments, Penalties & ExtensionsEstimated Tax screen, in the Overpayment applied from 20XX field and any state quarterly estimates you entered as paid. The program will also make M-1 adjustments for state tax if applicable.

Buildings and other depreciable assets: the program calculates this amount as follows:

Beginning balance (as entered on the Balance Sheet, M-1, M-2, M-3, Federal screen)

  • Plus the cost of any depreciable assets placed in service this year (entered on the Ordinary IncomeDepreciation (4562) screen)
  • Less the cost of any depreciable assets sold during the current year

= ending balance of buildings and other depreciable assets.

Less accumulated depreciation: the program calculates this amount as follows:

Beginning balance (as entered on the Balance Sheet, M-1, M-2, M-3, Federal screen)

  • Plus current-year tax depreciation (for assets entered on the Depreciation (4562) screen)
  • Less the accumulated depreciation for assets sold during the year

= ending balance of accumulated depreciation.

Tax depreciation is used by default for the balance sheet calculation. To use book depreciation amounts instead, see Using book depreciation for balance sheet Schedule L.

Depletable assets: the program calculates this amount as follows:
Beginning balance (as entered on the Balance Sheet, M-1, M-2, M-3, Federal screen)

  • Plus the cost of depletable assets placed in service this year (on the Ordinary IncomeOil & Gas screen)
  • Less the cost of depletable assets disposed of this year (on the Ordinary IncomeOil & Gas screen)

= ending balance of depletable assets.

Less accumulated depletion: the program calculates this amount as follows:
Beginning balance (as entered on the Balance Sheet, M-1, M-2, M-3, Federal screen)

  • Plus the current year tax depletion (for assets entered on the Ordinary IncomeOil & Gas screen)
  • Less the accumulated depletion for assets disposed this year

= ending balance of accumulated depletion.

Land (net of any amortization): the program calculates this amount as follows:
Beginning balance (as entered on the Balance Sheet, M-1, M-2, M-3Federal screen)

  • Plus the cost of any land placed in service during the current year
  • Less the cost of any land sold during the current year

= ending balance of land.

If you want to include land in this calculation, you must enter it in the Ordinary Income, Depreciation (4562) screen with a Method of 99.

Intangible assets: the program calculates this amount as follows:
Beginning balance (as entered on the Balance Sheet, M-1, M-2, M-3Federal screen)

  • Plus the cost of any intangible assets placed in service during the current year
  • Less the cost of any intangible assets sold in the current year

= ending balance of intangible assets.

If you wish to include intangible assets in this calculation, you must enter them in the Ordinary Income, Depreciation (4562) screen with a Method of 97, a Category of 8=Amortization, or any entry selected in the Amortization code section.

Less accumulated amortization: the program calculates this amount as follows:
Beginning balance(as entered on the Balance Sheet, M-1, M-2, M-3, Federal screen)

  • Plus current year tax amortization
  • Less any accumulated amortization for assets sold in the current year

= ending balance of accumulated amortization.

If you wish to include intangible assets in this calculation, you must enter them in the Ordinary Income, Depreciation (4562) screen with a Method of 97, a Category of 8=Amortization, or any entry selected in the Amortization code section, Liabilities and Equity.

Federal tax payable: Under the General, Miscellaneous Information screen, if you selected the Accrue federal tax box, the program will adjust this amount based on the tax calculated on this year's return.

State tax payable: under the General, Miscellaneous Information screen, if you selected the Accrue state tax option 1 or Accrue state tax option 2 box, the program will adjust this amount based on the tax calculated on this year's return.

Total retained earnings: the program calculates ending retained earnings in the following manner:

Beginning retained earnings (Sch L, Line 24, column b)

  • Plus net income per books, Schedule M-1, Line 1
  • Plus Additions to other retained earnings
  • Plus Amount of Other Additions to carry to Schedule L
  • Less distributions from Accumulated Adjustments Account (Schedule M-2, Line 7, column a)
  • Less distributions from Other Adjustments Account (Schedule M-2, Line 7, column b)
  • Less previously taxed income (Schedule M-2, Line 7, column c)
  • Less dividend distributions from accumulated earnings and profits (Schedule K, line 17c)
  • Less distributions in excess of Schedule M-2/earnings and profits accounts
  • Less Reductions to other retained earnings
  • Less Amount of Other Reductions to carry to Schedule L

= ending retained earnings(Schedule L, Line 24, column d).

Entries you make in Other additions or Other reductions to the accumulated adjustment account (AAA) don't automatically carry to the ending retained earnings on Schedule L. The AAA isn't a reconciliation of beginning and ending retained earnings. Amounts entered in Other Additions to carry to Schedule L and Amount of Other Reductions to carry to Schedule L will be included in the calculation of ending retained earnings. If the total ending balance of the Schedule M-2 doesn't equal the ending balance of retained earnings on the Schedule L, the program will automatically generate a worksheet reconciling the two amounts.

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