1. Reverse the Beginning Balance entry made earlier, in period 0 of the New year.
2. Make the accrual journal entry to move transactions posted in period 1 of New year with post dates from prior year, to period 13 of the prior year. The amounts for this journal entry can be obtained by running the GL Postings report for period 1 of the New year, selecting all accounts and Post Date range of 12/1/xx to 12/31/xx (use date format appropriate to your site). The report should pick up all transactions entered during period 1, which will result in an adjustment to prior year ending balances. Journal Entries and Sales postings that affect the prior year will not be included as these entries should be posted directly to the appropriate year.
3. Reverse the entry just made in period 1 of the New year. This step can be done by using the create reversing entry option when the first entry is made, or by recalling the first entry and then posting the reverse of this entry to period 1 in the new year. This entry will ensure that the accrual is reversed so it does not affect the new year (ie to ensure that the entries in period 1 of the new year that apply to the prior year are not counted twice).
4. Make any subsequent adjustments to prior year balances (tax adjustments or later corrections) in period 13 of the prior year. If these adjustments affect the income statement, you may need to reopen period 13 (by reversing the original closing entries) and re-close the period. In this case you will also need to reverse the 2nd Beginning Balance entry made by the system and re-run the Create Beginning Balances program to bring the final balances forward into the new year.
5. Close periods 1 –13 of the prior year (if not already done) as per the GL Procedures Guide. You can verify that all periods in the prior year have been closed properly or not by comparing the net income shown on the ytd income statement to the amount shown in the current retained earnings account.
6. Rerun the Beginning Balance Loader progam to bring the corrected prior year balance sheet account balances into period 0 of the new year.