How to Balance an Accrual Account with MC Trade Reports


This article will give you insight on balancing your general ledger accounts using MC Trade reports for Revenue Items that are not flagged as Cash basis. 


To start, we will review some accounting basics:
Beginning Account Balance + Invoices Created - Payments and Adjustments = Ending Account Balance

For our example we will balance Independent Dues account as of 1/31/2016.  There are actually four revenue items that feed this account as you will see in the attached reports.

Accounts Receivable Summary (Report)

  1. Run the Accounts Receivable Summary report (Reports>Revenue Reports>Accounts Receivable Reports>Accounts Receivable Summary).  This report works well as it provides summary balances as of a specified date.  In our example we will run it as of 12/31/2015 and get a balance of $2075.00.

  2. Next run the Transactions Posted for a Select Account  ( Reports>Revenue Reports>Transaction Reports>Transactions Posted for a Selected Account) for the Account Code we are working and a date range of 1/1/2016 to 1/31/2016.  In the example below you will see a row of adjustments totaling $374.00.  The next section gives us the invoices that were created totaling $78,241.00 and payments of $20,026.00. 

This brings us to this place in our exercise:

Beginning Account Balance  $  2,075.00 
add Invoices Created  $  78,241.00 
less Payments ($  20,026.00)
less Adjustments ($       374.00)
Ending Account Balance  $  59,916.00 


Now we run the Accounts Receivable as of a Date report (Reports>Revenue Reports>Accounts Receivable Reports>Accounts Receivable as of a Date) for 1/31/2016,  It gives us a balance of $54,119.00.  Yes, we have a problem as this is not the $59,916.00 we should have.  Which one is correct? We need to dig a little further.

The next thing we have to look at is the possibility of Pre-pays.  Many times, especially with dues, invoices are created and sent well before they are actually due and recognized.  If you look at the last page of the A/R Summary we ran as of 12/31/15, it actually shows us the pre-pays.  In our case, they total $5,995.00 of our invoices were paid on or before 12/31/2015.  This is where we are now:

Ending Account Balance A/R Summary  $  54,119.00
add Pre-Pays  $  5,995.00
Total  $  60,114.00

We are still off. Now it is time to use the detail in the transaction report.  In this case it was easy as I have invoices and payments that are typically in the hundreds of dollars.  First looking at the adjustments, I see a $99.00 and $275.00 adjustment.  The $99.00 seems out of place, so I went to the original invoice and found that this was actually for a different revenue item and that an incorrect adjustment type had been chosen.  I did the same thing with the payments and found the same thing, a $99.00 payment that was incorrectly coded to this revenue item when it had been invoiced for something else.  

Now taking these items back out of our earlier total brings us here:

Ending Account Balance A/R Summary  $  54,119.00 
add Pre-Pays  $    5,995.00 
Total  $  60,114.00 
less Adjusment error ($        99.00)
less Payment Error  ($        99.00)
Ending Account Balance  $  59,916.00 




Now the final step would be to fix the errors by making the correct adjustments so that we get the true final balance.

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