Recreating a company file

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I am trying to recreate a Balance Sheet for a company. The business assets were purchased in 2017 and up until mid last year, the bookkeeping was not maintained well. I am trying to figure out how to recreate retained earnings from the tax returns filed. It is a partnership. Right now I have all information from 2019 entered and the profit and loss is correct for 2019. I know that $7650 was invested at the time of purchase and that two loans were taken out to purchase the assets. When I started the company file, I started the existing bank balances with the beginning offset to retained earnings. I also have some items in the 2018 profit and loss because they were needed to reconcile the bank accounts. Suggestions?

 

[Drmdcpa]

You need an adjusting entry to set the 2018 balance sheet to the ending balance sheet on the 2018 return. This is standard operating procedure every year, not just when recreating records.

 

[Werner Reisacher]

At the end of the day, what counts is the accuracy of every position in your closing Balance Sheet. Does the Bank Balance shown in the B/S reconcile with actual Bank Statement. Does the company have accounts receivables? Check the accuracy of these balances with the customers that, according to your books, own the company money. Same applies to the outstanding loan positions.
The biggest problem in re-writing the books is the uncertainty about existing assets and liabilities on which no information is available. Interview people, search in the files, and carefully analyse prior year tax documents that might give you a hint about such issues.

Once you have established that the third party balances agree with your book balances and are sure that no unidentified positions exist, the difference between the identified Balance Sheet positions is the capital account of the Partners. Before closing the Balance Sheet, have the Partners sign the correctness of their Capital Accounts.