Specifications

Computer Tutorial 3 Lesson 5  11
EXERCISE 5.6
Posting an adjustment to a previous year
Assume that the inventory value was overstated at the end of the previous year by $50,000.
The amount is material, and the books have already been closed but no financial statements
have been published yet. It is necessary to post an adjusting entry to the prior year in order to
correct this.
The journal entry for posting to a previous year is no different from an ordinary journal entry.
The only thing to check is the date of the entry.
1. Click G/L Transactions, then double-click the Batch List icon. The G/L Batch List
window opens.
2. Create a journal entry in a new batch to reflect the overstated item.
3. The journal entry should be as follows:
Source
Line code Description Account Dr. Cr.
1 JE Cost of goods sold 5000 $50,000
2 JE Inventory 1300 $50,000
Make sure you select 2009 as the fiscal year by ensuring that the Year/Period is set to
2009-ADJ. Your entry should resemble Exhibit 5-7.
EXHIBIT 5-7
Entry for prior period adjustments
4. Click Add, then close the G/L Journal Entry window. From the G/L Batch List
window, print this new batch.
5. If you are satisfied the entry is correct, post the batch.
Notice that the reports show two entries, not just the one you entered. The first entry
was made to reflect the posting of the single entry in your batch, while the second
was created and posted automatically to close the change to account 3200 (Retained
earnings).