Issue: When running the Balance Sheet for multiple periods in Active Ledger, Users may encounter the following error;
Closing balance of retained earnings in column 2 equals $xxxx, which differs to opening balance of retained earnings in column 1 of $yyyy
Cause: This issue occurs because the rolled-over retained earnings balance in the new year dataset differs from the prior year's closing balance in the retained earnings of the previous dataset.
Resolution:
Below is a step-by-step guide to investigate and resolve this issue:
Verify Accounts in Retained Earnings Header Group:
Check the Accounts screen to ensure there are no accounts under the Retained Earnings header group that should not be there.Compare Datasets and Draft a Rollover Journal:
For different sources: Use the Compare Datasets feature to draft a rollover journal from the prior year dataset into the new year dataset. Ensure there are no conflicting journals in the new year dataset that might interfere with the opening balance journal created via the Compare Datasets feature.
For similar sources: Use the Rollover feature within the new dataset to carry over values from the prior year. This ensures the correct rollover values are transferred to the next year. Ensure there are no conflicting journals in the new year dataset that might interfere with the opening balance journal created via the rollover feature.
Check Profit Distribution Journals**:
For most sources like MYOB, ensure profit distribution journals are not entered directly into the MYOB file.
Profit distribution journals should only be entered into Active Ledger to maintain accuracy.
**Here is an example of the above scenario on how profit distribution journals can cause the error:
The client posted a distribution journal in their MYOB file, moving the year-end retained earnings balance (from “Distribution of Profit”) into the “Share of Profit” account. As a result, the total retained earnings balance for the current year was reduced to nil.
In Active Ledger:
In MYOB:
Whilst in MYOB at the year end, current earnings are cleared into retained earnings automatically via a system journal. This imports into Active Ledger as a movement journal for the next year. Hence next year's retained earnings balance is the full amount of 76k versus the balance of nil for the current year.
Best practice is to delete that distribution journal in MYOB. And enter the distribution journals in Active ledger which will also allow you to post directly to the retained earnings account.
If you encounter the same error on a Trading account's P&L page, consider ticking the opening balance checkbox for the different stock-on-hand accounts you have by editing them in the Accounts page. Then, refresh the opening balance in your datasets to ensure the balance is rolled over separately for each trading account in the opening balance rollover journal.