User Support Forum

We were overcharged double for two years on a maintenance agreement on our handicap elevator. (Checks were cut without knowledge of new agreement) We received a refund for the overcharge. Is it possible to correct expenses in the past so that there aren't zero expenses in the coming years. For example if the actual expense was 500.00, we were overcharged by 500.00 for two years and received 1000.00 refund, if costs remained the same there would be no expenses for two years. We would like to correct now to reflect actual costs. Would it be simpler to just have a prepaid expense for two years?

Could you:

Current year/month of refund check entry:
01-1110 Checking 1000.00 (Debit)
01-3110 Unrestricted Net Assets (Equity Account) 1000.00 (Credit)

Correcting Entry for year 2010 posting month
01-3110 Unrestricted Net Assests 500.00 (Debit)
01-XXXX Elevator Expense 500.00 (Credit)

Correcting Entry for year 2011 posting month
01-3110 Unrestricted Net Assests 500.00 (Debit)
01-XXXX Elevator Expense 500.00 (Credit)

Notes reflect reasons for entries.

Is there a single entry that would be better? My accounting and the users accounting is a bit rough, and I don't have access to accounting to see if I can even go back 2 years. Thanks for any input.

David

Chances are that 2011 is not open for correction, and almost certain that 2010 is not open for correction.

This entry that you suggested is technically correct.
Current year/month of refund check entry:
01-1110 Checking 1000.00 (Debit)
01-3110 Unrestricted Net Assets (Equity Account) 1000.00 (Credit)

The reason I say "technically" correct, is because your overpayment of expenses in 2010 and 2011 are now reflected in your unrestricted net asset account. To apply the money there is most "logical" place.

Another alternative is to count it as income in 2012, which I would say is "second best".
01-1110 Checking 1000.00 (Debit)
01-4180 misc income 1000.00 (Credit)

I don't like to directly transact the equity accounts, unless there is no other alternative. It's just my personal preference. Others may have no trouble at all doing this.

In this case, there is no other "equally effective" alternative, so you can take your pick.