Retained Earnings


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I have a C Corporation with a possible Retained Earnings issue. A friend of mine looked at my books and said my current Retained Earnings number as of today is less than it should be based on an old financial statements he found for our company. He was comparing the current Retained Earnings number to a financial statement dated 12/31/10. We use the calendar year for our fiscal year and are on accrual basis. These fianancials were compiled by a CPA I no longer use. I compared the December 31, 2010 Balance Sheet numbers from our accounting software to the Schedule L numbers on our 1120 tax return which we filed on 9/12/2011. All the Balance Sheet numbers match perfectly including Retained Earnings. I think our books are fine. Am I missing something? The Schedule L numbers on the 1120 are supposed to match the books, aren't they?

Thank you for you assistance.
 
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Nothing to worry about

Whether the numbers match or whether they don't, you're still fine. And, no, the tax return, Schedule L numbers don't always match or reconcile back to your financial statements. Just below the Schedule L there is the M-1 adjustment schedule that reconciles the books to the return. These adjustment include temporary and permanent difference between the books and your return. See? \

Call me with questions at 972-839-0456
 

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