Issue/Symptom/Question

Perform an Initial Load of Trial Balance & Supporting Subledgers

Applies To

PENTA for Windows

Reference Manual

Resolution/Fix/Answer

This information is intended for PENTA “super users” responsible for data conversion and describes the entry of initial general ledger trial balance amounts and subledger historical detail for a mid-fiscal year conversion.

You begin establishing the initial trial balance in PENTA with a general journal entry that includes an entry for each Organization Unit/ledger account that has a balance as of your conversion date. If you perform the conversion as of the start of a new fiscal year, this journal entry consists of balance sheet Organization Units and accounts only. If the conversion is not as of the start of a new year, the initial trial balance journal entry includes income statement Organization Units and accounts as well.

Because PENTA does not allow journal entries to subledger accounts (AP, AR, cost of sales, revenues, fixed asset original cost, accumulated depreciation, etc.), you must enter balances for these accounts into temporary clearing accounts. As you perform the steps of this process, you will distribute the clearing account balances (reduce it to zero) into the applicable subledger accounts with the appropriate supporting detail. The majority of this Business Process explains the distribution of the individual subledger balances while zeroing the affiliated clearing account.

Note: You must perform complete period end closing procedures on your old system before entering trial balance information in PENTA. All subledgers (accounts payable, accounts receivable, cost of sales, revenues, fixed asset original cost, accumulated depreciation, etc.) must be in balance with the general ledger before entry in PENTA. This eliminates the possibility of having balances in PENTA’s subledger clearing accounts when the initial load process is complete. If subledger detail in your old system does not agree with general ledger control accounts, PENTA’s clearing accounts will have a non-zero balance.

Sample Information

This is a sample trial balance and includes many of the usual subledger accounts found in a general ledger. (Subledger accounts in PENTA have an assigned edit rule.) This Business Process carries this sample information throughout each step. Note that these are not the literal entries you should make; the examples merely exist to help you better understand the Trial Balance process.

This sample uses the following dates:

• Prior Fiscal Year ends 12/31/11

• Conversion date is 10/31/11

10/31/11 Trial Balance

Job Gross Margin

Revenue and cost information in the income statement are for jobs that have activity in the current and prior fiscal years. You will load current year and prior year cost and revenue amounts in separate steps.

Billing Information

Use the following billing table to determine the current and prior year billing history amounts to load.

Prerequisites

• You set up clearing accounts prior to loading the trial balance, and used the same account class code as their corresponding subledger account. For example, if the normal Accounts Payable Account is “2010” with an account class code of “liability” and an edit rule of “AP,” you would establish an Accounts Payable Clearing Account with a similar number (2011, if possible) and a class code of liability. There should be no edit rule assigned.

• You set the following System Options:

• Set System Option 74 (Recognize Revenue Schedule) to N so Revenue Recognition does not calculate with the close process.

• Set System Option 76 (Recurring JE with Close) to N so recurring journal entries do not process with the close process.

• Set System Option 235 (Run Depreciation/Disposal During Close) to N so asset depreciation and disposals do not process with the close process.

• Set System Option 101 (Reverse Last Rev Rec) to Y to allow you to reverse prior Revenue Recognition calculations for a period.

• Contract line items must exist for your jobs. (This allows you to load open Accounts Receivable invoice and billing history amounts.)

• A “Retention” contract line item must be set up on your jobs. (This allows you to load Accounts Receivable retention amounts.)

• Set up accounting periods for conversion year and prior year.

Note: Do not set up clearing accounts for cash edit rule accounts or the accounts receivable retention account.

Process

1. Enter Initial Trial Balance

A. Make your entries.

Finance & Accounting > Data Entry > Journal Entries > Journal Entry

1. In a clearing account, enter the balances of all general ledger accounts that have a corresponding subledger (all edit rule accounts, except for cash accounts receivable retention).
   Due to the manner in which PENTA loads open receivable balances, load the Accounts Receivable Retention balance into the Accounts Receivable Clearing Account.

2. Date the trial balance entry.
   Following our example, you would enter 10/31/11.

The following table shows the resulting accounting entries from the example data above.

B. Check your work.

1. After successfully distributing the Trial Balance journal entry, generate a Trial Balance Report. You can produce this report for a single Organization Unit or for a balance sheet and its child Organization Units. (Because you need to verify your entries at the lowest level, do not generate the Consolidated Trial Balance Report.)
   The Report Code is TRIALBALANCE.

2. Load Non-Retention Accounts Payable Invoices

A. Make your entries.

System Management > Initial Load > Finance & Accounting > Accounts Payable

1. Load non-retention accounts payable invoices that are open as of the conversion date.
   This entry establishes detail vendor/invoice information within the Accounts Payable subledger accounts (and establishes the balance in the AP edit rule account and zero the balance in the Accounts Payable clearing account).

2. Create separate initial load entry batches for each Accounts Payable subledger account in your trial balance.

• The Posting Date on these entries is the conversion date.

• The Invoice Date is the actual invoice date.

3. Use the Job/SC/WO pop-up window to associate a Job with the open payable amount so that Accounts Payable aging reports sort the invoices by job.

4. Close the pop-up window and main window when you are finished.

Following our example, the following entries result from the Accounts Payable Initial Load window distribution:

B. Check your work.

1. When all non-retention amounts are distributed, generate an Accounts Payable Detail Aging Report as of the conversion date to confirm open amounts by vendor/invoice number.
   The Report Code is APDTLAGING.

2. Generate the Trial Balance report as of the conversion date to confirm the Accounts Payable clearing accounts are zero.

3. Load Accounts Payable Retention Invoices

A. Make your entries.

System Management > Initial Load > Finance & Accounting > Accounts Payable

1. Load accounts payable retention invoices that are open as of the conversion date.
   This process is nearly identical to loading accounts payable balances; however, instead of using the amount field, you use the retention amount fields.
   Notes:

• Enter the batch total in the Total Retention Amount field.

• Enter the invoice-specific retention amount in the Ret’n field.

• Do not enter invoice amounts in both the “amount” and “retention” fields on the same invoice distribution.)

• The Posting Date on these entries is the conversion date, and the Invoice Date is the actual invoice date.
  Use the Accounts Payable retention account.

2. Use the Job/SC/WO reference pop-up window to associate a Job Id with the open payable amount so the Accounts Payable aging reports sort the invoices by job.

Following our example, these entries would result from the Accounts Payable Initial Load window distribution:

B. Check your work.

1. After distributing all retention amounts, generate an Accounts Payable Detail Aging Report as of the conversion date to confirm open amounts by Vendor/Invoice number.
   If you maintain retention payables in a ledger account separate from non-retention payables, limit the Accounts Payable Detail Aging Report to the Retention Payable Account number. The Report Code is APDTLAGING.
   The Accounts Payable Clearing Account(s) balance(s) should now be zero. If it is not zero, here are some possible explanations:

• Entries not associated with the distribution of the opening accounts payable balance posted to the clearing account.
  The clearing account contains one general journal entry representing the opening trial balance along with hundreds or thousands of purchase journal entries that represent the distribution of individual invoices. To identify transactions that do not belong, use the General Ledger–Date Range report to audit for:

• General journal transactions that are not the original trial balance distribution.

• Purchase journal transactions that do not have the description “AP INITIAL LOAD.”

• Transactions that originate from journals other than the general journal or the purchases journal.

• Accounts payable detail that existed at point of conversion was not properly distributed.
  Make a detail invoice-by-invoice comparison of a PENTA AP Detail Aging Report and an aging report from your previous system to identify these differences. Some systems remove an invoice from a backdated aging report if it is paid subsequent to the report date. (Following our example, the invoice is open as of 10/31/11 and subsequently paid on 11/05/11. An aging report run on 11/12/11 as of 10/31/11 may exclude this item).

• Before converting to PENTA, subledger detail did not agree with your previous system’s control account in the general ledger.
  If these were not in balance before conversion, they will not be in balance after the conversion. Since PENTA creates entries into the ledger via the distribution of Accounts Payable detail, a balance remains in the Accounts Payable Clearing Account. You must determine how to treat this balance (e.g., attempt to reconcile, write-off, etc.).

4. Load Total Accounts Receivable Open Invoices

A. Make your entries.

System Management > Initial Load > Accounts Receivable

1. For accounts that have an AR Edit Rule, load accounts receivable invoice details at gross value (including retention amounts) that are open as of the conversion date.
   In summary, you will be doing the following for Accounts Receivable initial load:

• Loading regular accounts receivable amounts and accounts receivable retention amounts into the regular receivable account.

• Transferring the Accounts Receivable retention amounts to retention receivables in a subsequent process. (Step 5 will transfer the retention balance from the regular receivable account to the retention account.)

Note: Use the original invoice date as both the invoice date and the posting date.

2. All job related receivables must reference a job contract line item. For conversion purposes, create an initial load contract line item for each Line Item Type that exists on a job. PENTA has three types of contract line items: lump sum, cost plus, and unit price; therefore, if you bill a job on a lump sum basis, you should establish a single conversion lump sum contract line for that job.
   If a job has both lump sum and cost plus components, create two conversion contract line items–one lump sum line item and another cost plus line item. Initially, load all open receivable amounts, billing history, and earned revenue amounts against these line items.

3. As a follow-up task for Lump Sum line items (and Cost Plus and Unit Price line items if the invoice format is one that shows previous billings by line item), allocate the amounts across the actual contract line items for jobs where PENTA’s automated invoicing process will issue invoices for the job.
   If you do not utilize the automated invoicing capabilities for a job, the subsequent allocation across contract line items is not necessary.

Important! The Accounts Receivable Initial Load window posts entries to both the Sales/Revenue Account and to the Accounts Receivable Subledger Account. For this reason, make sure you correctly date the open receivable transactions with the original invoice date.

Following our example, these entries would result from the Accounts Receivable Initial Load window distribution:

5. Segregate AR Retention Amounts from Regular Receivables

A. Make your entries.

System Management > Initial Load > Accounts Receivable

1. Load open accounts receivable retention balances. Notes:

• The Accounts Receivable Account # (on the Initial Load AR tab) should be the Accounts Receivable account you loaded the receivable into during Step 4, not the retention receivable account.

• Load all open Accounts Receivable retention to the retention contract line item by entering the amount in the AR Detail tab’s “Retention Amt” field.

• Use the original invoice date as both the invoice date and the posting date.

Following our example, these entries would result from loading retention balances through the Accounts Receivable Initial Load window:

B. Check your work.

1. After distributing all retention amounts, generate an Accounts Receivable Detail Aging Report as of the conversion date to confirm open amounts by customer/invoice number. The Report Code is ARDTLAGING.
   Accounts Receivable Clearing Account(s) balance(s) should now be zero. If they are not zero, some possible explanations are:

• Entries not associated with the distribution of the opening accounts receivable balance posted to the clearing account.
  The clearing account contains one general journal entry representing the opening trial balance along with hundreds or thousands of sales journal entries that represent the distribution of individual invoices. To identify transactions that do not belong, use the General Ledger–Date Range report to audit for:

• General journal transactions that are not the original trial balance distribution.

• Sales journal transactions that do not have the description “AR INITIAL LOAD” or “PROGRESS BILLINGS INITIAL LOAD.”

• Transactions that originate from journals other than the general journal or the sales journal.

• Accounts Receivable detail that existed at point of conversion was not properly distributed.
  Make a detail invoice-by-invoice comparison of a PENTA AR Detail Aging Report and an aging report from your previous system to identify these differences. Some systems remove an invoice from a backdated aging report if cash was received on the invoice subsequent to the report date. (Following our example, you have an invoice open as of 10/31/11 and subsequently pay it on 11/05/11. An aging report run on 11/12/11 as of 10/31/11 may exclude this item.)

• Before converting to PENTA, subledger detail did not agree with the control account in the general ledger (in your previous system).
  If these were not in balance before conversion, they will not be in balance after the conversion. Since PENTA creates entries into the ledger via the distribution of Accounts Receivable detail, a balance remains in the Accounts Receivable Clearing Account. You must determine how to treat this balance (e.g., attempt to reconcile, write-off, etc.).

6. Load Assets

A. Make your entries.

Fixed Asset Management > Asset Information

1. Load the assets on hand at the time of the conversion.
   PENTA opens the Acquisition Offset Account pop-up window after you load the assets. You cannot open this pop-up window. PENTA automatically opens it when you initially define an Asset or update the acquisition/original value of an Asset. PENTA requires this information for ensuring proper accounting entries to the general ledger.

2. Use the Acquisition Offset Account pop-up window to enter:

• The original asset acquisition date in the Posting Date field.

• The fixed asset clearing account in the Account # field.

Following our example, these entries would result from the Asset Information window distributions:

B. Check your work.

1. Run the Fixed Asset Subledger report as of the conversion date to confirm asset values. The Report Code is FASUBLEDGER.
   The fixed asset clearing account should have a zero balance as of the conversion date.

7. Load Accumulated Depreciation Balances

A. Make your entries.

System Management > Initial Load > Fixed Assets/Equipment > Depreciation

1. Determine the following:

• Your accumulated depreciation balances as of the prior fiscal year end.

• Your year to date values as of the conversion date.

2. Load each of these amounts in separate batches. You also have separate batches for each Accumulated Depreciation Clearing account.

3. Load the depreciation amount for each depreciation base (e.g., book method, tax, etc.). PENTA only posts accounting entries for the book method.

7.i: Following our example, entries posted for prior year depreciation balances as of 12/31/10 are: