If you need to process transactions for a prior period or prior year after the end of the period or year, the following procedure can be used. This procedure ensures that you do not have cut-off problems when trying to reconcile sub-ledger to general ledger control balances, and it prevents transactions (of all kinds) from being posted to incorrect periods. The procedure listed applies to posting transactions to a prior period in the same accounting year, but the same procedure can be used at year-end to post transactions backward into a prior period and prior year.
1. At the end of the day on the last day of the current period (after all transaction processing for the day has been completed) produce the sub-ledger reports that will be used to validate the ending general ledger balances for the period. In this example, we will assume the current period is 7 and the last day of the period is 7/31/04.
2. Once, the sub-ledger reports for the current period (7) have been produced, change the default accounting period to the next period (period 8). The System date should automatically be set to the proper values each operator logs into the system on the first day in the next period (the next morning or 8/01/04).
3. Post transactions that should affect sub-ledger balances (AP invoices, AP payments, AR payments, deposits) in the prior period to the new current period (8). Each of these transactions should be loaded with a post date that indicates that the transaction applies to the prior period and year (7/31/04 would typically be used for the post date in this example). The Post Date field is a user-definable field that is included in all accounts payable and accounts receivable programs that affect sub-ledger report balances. The Post Date field is maintained in each journal entry line created by the system and the field can be used as a selection when you generate GL Posting Reports.
4. Post transactions that should affect sub-ledger balances in the current period to the current period (8). The Post Date field can be set to the current date (or another date in period 8) when these transactions are processed as they do not affect prior period balances.
5. Post transactions that do not affect sub-ledger reports balances, like Journal Entries or Sales Posting (which affects only GL balances) to the proper period (period 7 in this case) with appropriate post dates (7/31/04 or another period 7 date). Journal entry transactions (Source = JE) and Sales Posting Transactions (Source = SP) will not be included on the report that will be generated as part of this procedure.
6. Once all transactions that affect the prior period ending sub-ledger control account balances in the general ledger have been processed (this may be shortly after the end of the prior period or later – one of the advantages of using this method), you should run the report that will be used to adjust the prior period ending balances. This report is produced as follows.
1. Select the GL Journal Postings report from the General Ledger Reports Menu.
2. Enter the current year (2004 in this example) in the Accounting Year selection, and the current period (8 in this example) into the Period From and To selections.
3. Enter the post date used to identify transactions that were posted to period 8, that should be recognized in period 7 (7/31/04 in this example) into the Post Date From and To selections.
4. Select the appropriate division (the division in which you wish to adjust the prior period). This procedure can only be used for one division at a time (all journal entry lines for a single journal entry must be in the same division).
5. Select the following JE source codes using the Source In Selection (these source codes will include all transactions affecting the AR and AP sub-ledgers as well as any sub-ledger transactions that result in changes to your cash account balances). The Source codes to be used include (AA,AP,AR,CA,CD,CV,IA,MD,NI,OC,SD)
6. Select the Print Detail and or the Print Extended Detail selection so that the transaction detail is output on the report (this will provide detailed backup for the journal entry that will be made to adjust the prior period ending balances).
7. Use the account totals from the report produced in the previous step and the Journal Entry program to make the accrual journal entry to move transactions posted in period 8 with post dates of 7/31/04 into the prior period (7). The report should pick up all transactions entered during period 8, which will result in an adjustment to the prior period 7 balances. Journal Entries and Sales Postings entries that affect the prior period will not be included as these entries should be posted directly to the appropriate period (7 in this example). Entering the account totals from the report will result in a balanced journal entry. The Journal Entry should be made in period 7 and the post date should be set to the date that the adjustment is made (the period and post date, plus the JE source will prevent these entries from being included on the report used for this procedure).
8. Once the accrual entry has been made for the prior period, use the Recall JE option in the Journal Entry Program to recall the journal entry. When prompted, select the reverse amounts option (to reverse the amounts used in the period 7 entry. Post the reversing journal entry to period 8. This step ensures that the accrual made in period 7 is reversed in period 8 (so that you do not have reconciliation problems when checking period 8 general ledger balances versus the appropriate sub-ledger reports). This step also ensures that the transactions that are included in the period 7 accrual are not counted twice.
9. Keep the report produced by this procedure to identify the cause of any differences between the ending sub-ledger