How to Create a Journal Entry to bring over 1099 Cutover Balances using an Equity Historical Balancing account

26 steps
|
4 minutes

Navigate to Brokerage Engine.

Click "Accounting" to navigate to the module.

Click the "Journal Entries" option.

Record Journal Entry

Click the "New Journal Entry" button.

Click the date field and type the Cutover Date.

Click the "Journal No." text field to add a reference number or text.

Use the dropdown menu to select the Account tracking for 1099 purposes.

Fill out the Debits field to add the total balance to transfer for each Agent.

Click this text field to add a description such as "1099 Cutover".

Use the dropdown menu to select the Vendor profile for the Agent.

Click on subsequent lines to add 1099 balances for more agents.

Click "Add Line" to keep adding rows to the Journal Entry.

In order to balance the Journal Entry, you can use an Equity Historical Adjustment Account.

The Equity Historical Balancing account (also known as Opening Balance Equity) is typically used during the setup process to temporarily track the difference between the opening balances entered for asset accounts and those entered for liability and equity accounts.

Click on the menu to select the account.

Click this text field to add the total Credits amount.

Once the Debits and Credits columns match, click the "Save" button.

Click "OK"

Review Journal Entry

Click "Journal Entries"

The 1099 Balances Journal Entry will be reflected in the table as of the Cutover Date.

A second Journal Entry should be created to reverse the previous entry, ensuring that the 1099 tracking accounts used (e.g., Commission Paid account) are not artificially inflated, as these amounts were already included in the Cutover Balances Journal Entry.

Reverse Journal Entry

Navigate to the 1099 Cutover Balance Journal Entry.

Click the arrow on the "Journal Entries" button.

Click the "Reverse" option.

A Reversal Journal Entry will populate. The system will add a letter "R" to the end of the "Journal No." field.

Click "Save"

Click "OK"

The Journal Entry to bring over 1099 Cutover Balances and its Reversal will now display on the table.