How to Balance ACR to the Ledger

How to Balance ACR to the Ledger

A/R & General Ledger Balancing: A/R Balancing Process

One of the basic functions of any accounting operation is to balance the Accounts Receivable Subsidiary Accounts with the General Ledger. Within the AGRIS system, the following steps should be performed.

1. Create your SJI entries for the period you are closing.

   1. Make certain that you inform all other employees that you are closing the month and that they should NOT enter any further transactions for that specific month.

   2. Adjust your date range (earliest and latest date allowed) to avoid the possibility of backdated transactions in Customize > Date Groups.

   3. Be sure and transfer these entries to ledger for posting in LDG > Journal Entries > System Journal Entries.

   4. Make sure that all transactions post and that you do not have any "invalid" entries. If you do, correct those prior to running a General Ledger Trial Balance Report.

2. After posting your SJI entries in Ledger, print a Trial Balance Report for the period you are closing and wanting to balance.

   1. LDG > Report Manager > Journal Entry Reports > 1. Print Standard Reports > 4. Trial Balance Report

3. From this point forward, any reports or processing that is done, must be done when no one is in that specific package or your numbers may be
   inaccurate. The processing can be automatic (unmanned) and can be handled at a time when employees are not in the system.

4. Run the "Aging and Finance Charge". It is not necessary to calculate the finance charges or interest credits if you are only balancing the accounts. The ending date of the Aging Period should be the last day of the period for which you are balancing (for example, 12/31/23 if you are balancing the month of December).

   1. This process places the various outstanding balances in the proper aging buckets for your reports and also brings into balance any accounts that might have been out of balance.

5. Print an A/R Aging Analysis Report. IF the day you run this report is not the same date as the close date, then you will want to make sure that you answer "Y" to the question: "Calculate Ledger Reconciliation Balance".

   1. This allows you to see the A/R Balances as of a certain date in history. Do not purge a period that has not been balanced.

   2. Do not delete any name IDs that have had activity in a period that has not been balanced.

6. If you maintain your Prepayments and A/R balances in the same general ledger code, then you should verify that the "Account Balance" column matches your ending balance of you're A/R Account on the General Ledger Trial Balance Report.

   1. If you maintain separate accounts, then you should add the "Account Balance" & "Prepaid Balance" columns together to verify the balance of Accounts Receivable in the ledger.

   2. The "Prepaid Balance" should match the General Ledger account that you have set up for Pre-payments.

OUT OF BALANCE RESEARCH

If the Subsidiary balances do not match to the General Ledger Account Balances, here are some processes you may take to determine the difference:

1. In SJI, build an Execution ID Work File from the first day to the last day of the period you are trying to balance.

2. Run an Activity Detail Report - By Name ID for the specific General Ledger Account Code (Accounts Receivables and/or Prepayments).

   1. The dollar amount on this report should be the amount of change shown on the General Ledger Account Inquiry Screen for the period. If not:

      1. See if any manual journal entries were posted to this account. If yes, determine why and make sure that an offsetting entry was made to the specific customer's account. Normally a manual journal entry is never made to the Accounts Receivable or Prepayment account.

      2. If there were any manual Bank, A/R or A/P transactions, determine if the general ledger distribution was coded to A/R or the account for Prepayments. Normally, a manual transaction is not coded to one of these accounts.

3. Run the Standard A/R Invoice & Payment Reports that show transaction tracking dates. Look for any transactions that have a status code of "A" and a transaction tracking date after the "original date". If the
   transaction tracking date is later (after) the original date, then you have a "backdated" transaction and it may not have been posted to the ledger.

4. Run an Invoice and payment report for any voided transactions. Was the voided date the same as the transaction tracking date? Was it reentered on another account and backdated to a previous date?

5. Use the Activity Detail Report - By Name ID, along with your aging report from the prior month to calculate the ending balance, for each customer,
   for the period in question. Even if the prior month report does not balance to the ledger system, you can still use this approach. This will allow you to maintain the same outage from the prior month. Any other amount should be identifiable by viewing each individual account.

6. Once the outage is determined, make any necessary journal entries or other entries necessary to bring the two in balance.

At this point, your accounts should be in balance.

** The process from this point forward can been designed to run in a report stream. You may process the data from the report stream or run the reports individually. A suggested report stream might include **:

Report Dates

Aging & Finance Charge E.P.M.
A/R Aging Analysis - By Name ID Number B.P.M. E.P.M.
Build Execution ID Work file B.P.M. E.P.M.
Invoice Register with Transaction Tracking B.P.M. E.C.M.
Payment Register with Transaction Tracking B.P.M. E.C.M.
Invoice Reg. with Trans. Tracking (voids only) B.P.M. E.C.M.
Payment Reg. with Trans. Track (voids only) B.P.M. E.C.M.

** Before you create the report stream, you will want to create user define reports based off of these standard reports to create your default dates & specific parameters. Reporting Dates can also be used when designing these reports.

Helpful Links for More Information:

Detail Balancing of AR

Month End Procedures

Document copied from AGRIS > Help > Frequently asked questions - S. Pykare 8.16.23