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You are here: General Ledger > G/L Supplements > #398 Year End Closing Entries
#398 Year End Closing Entries
Overview
Year End Closing Entries calculate and prepare journal entries necessary to close the books at year end including:
Accrual of leave costs and distribution of salaries to projects in the General Ledger
Closing the fringe benefit expense amounts and distributing costs to projects in the General Ledger Closing indirect expense amounts and distributing indirect costs to projects in the General Ledger
Closing supplemental allocations such as Service Unit or Special Allocations to projects in the General Ledger
Closing adjustments to projects resulting from the GMS Cost Locks supplement in the General Ledger
Recording revenue recognitions for accounts receivable, deferred revenue or refundable advances and transfers from the general operating account or closing out to a fund balance or net asset account.
Things You Should Know
Coding
All entries to close the cost allocation expense amounts will use program element 997000 so it will not change the actual pools amounts but only close the control accounts in the general ledger.
Once account code information or revenue recognition entries are entered, they are retained and automatically displayed the next time you go into that menu item. If you click on the very first menu item, Prepare for the New Year, you can select to Clear Pools for the year and/or clear Revenue Recognitions for the year.
You may go in and out of different sections as many times as necessary. Click on the X in the upper right to return to the menu.
You may perform some of the sections at different times than others without consequence. For example, you may prepare the closing entries for leave liability adjustments and closing the fringe and indirect expense accounts and control accounts prior to the audit field work. Upon completion of audit testing and processing adjustments, you may go to the revenue recognition section and close out projects. In this case, you do not want to click on Prepare for the New Year. You would just go directly to Revenue Recognitions.
All accounting batches entered prior to preparing the final closing entries must be posted. Since the Year End Closing Entries supplement picks up the amounts posted to the General Ledger, you will receive incorrect information using this supplement if all batches were not posted and monthly processing completed.
Step by Step Instructions
Individual menu items are listed for each activity (Supplemental items will be highlighted only if used). Each section will display applicable accounting information and request necessary account information. After each menu item has been confirmed, you may print out the worksheet for each item. A trial balance worksheet can be printed and final journal entries that were automatically prepared should be printed and posted.
Prepare for the New Year
Are you sure you want to prepare for the new year?
If you click on Yes, you can then select to Clear Pools for the Year and/or Clear Revenue Recognitions for the Year. If you select the Clear Pools for the Year, it will remove any closing entries for pools that exist in tblYearEndClosing. If you select Clear Revenue Recognitions for the Year, it will remove any closing entries for projects in tblRevenueRecognition. Be certain to click Continue after making your selection(s).
The first time you go into YE Closing Entries for a fiscal year, make sure you clear pools for the year and revenue recognition entries prior to preparing any close out entries for this fiscal year.
Salary and Leave Cost
Two steps are performed in this section.
Recording Accrued Leave
If your setup instructions for leave accrual have a checkmark for any leave type, an analysis of each leave liability by class will be displayed. If you do not accrue leave, the comp leave section will be the first to appear.
Beginning Liability
These amounts represent the opening fiscal year liability that are entered manually for the first year on GMS and are rolled forward from that point on during Year End processing. These amounts are reflected in the matrix in Tools\Cost Allocation Setup\Leave Allocation.
Unless manually edited, these amounts will equal your ending liability from the prior fiscal year as well as the General Ledger liability account balance.
YE Valuation
These amounts are calculated from the employee leave balances and rate of pay that was used during the last leave cost allocation process. It should match the last Leave Rate Computation and Analysis that was printed.
Accrual Rate
This is the percent rate established in the setup matrix in Tools\Cost Allocation Setup\Leave Allocation tab.
YE Liability
These amounts equal the year end valuation multiplied by the accrual rate. This amount prints each month under Section 2 of your Leave Rate Computation and Analysis next to Current Liability.
Change in Liability
This amount will reflect the current year adjustment to the accrued leave liability account and is reflected in the automatic journal entry.
GL: Select the liability code for the accrued leave type.
Balance: This amount will represent the current year adjustment to accrued leave in the General Ledger.
Record (specific Leave Type i.e. AL): Print and verify this amount. Note: should you have multiple leave types for which you accrue the cost make sure you repeat this process for those leave types. When all appropriate leave types have been completed, click Next.
Recording Compensatory Time
If your agency records compensatory time, an analysis will be displayed regarding the value of comp earned, taken and balance at the end of the year. If you do not record comp time on your books, this step will be skipped.
---> What is the present accrued comp leave GL code?
Recording Salary Adjustment
---> Where do you wish to charge any adjustment resulting from salary charges?
Note: Usually this is charged to a current year unrestricted element and a miscellaneous expense.
Element
Enter the appropriate element.
GL Code
Enter the general ledger code.
Select the Next button and the Journal entry amounts will be displayed.
Summary of Adjustments to Salaries and Wages
A recap of the adjusting entries for accrued leave and to the general ledger 50000 account will be displayed.
Formally Closing Salary Account 50000
The amounts to close the salary control account to project equity accounts and to the Indirect Cost pool (if applicable) will be displayed.
Select Print and verify amounts.
Fringe Benefit Pool
Two steps are performed in this section.
The total year-to-date amounts in the fringe benefit pool (credit entries) and the debit to the fringe benefit pool and the debit to the fringe benefit control account will be displayed.
Select Next to proceed.
Based on the YTD Cost Allocation Summary, amounts to be debited to project equity accounts and the indirect cost pool (if applicable) will be displayed.
--> You will be alerted if there are any penny differences between the pool and its allocation. If there are, you will be asked to enter the Element and GL code you wish to charge the difference. Normally, you would enter a current year unrestricted element and a miscellaneous expense code.
Select Print and verify amounts.
Indirect Cost Pool (If Supplement #403 Dual Indirect Cost Pool is installed, menu will state that)
Two steps are performed in this section.
Total year-to-date amounts for each element in the indirect pool (credit entries) and the debit to the indirect cost control account will be displayed.
Select Next to proceed.
Based on the YTD Cost Allocation Summary, amounts to be debited to project equity accounts will be displayed.
--> You will be alerted if there are any penny differences between the pool and its allocation. If there are, you will be asked to enter the Element and GL code you wish to charge the difference. Normally, you would enter a current year unrestricted element and a miscellaneous expense code.
Select Print and verify amounts.
There are also two situations where the difference between the pool and its allocation are not from rounding and may be substantial. They are when your organization has a Predetermined Rate or Fixed Rate with Carry-forward.
Predetermined Rate – a predetermined rate is applied to the financial reports and funding sources are billed accordingly. Except under very unusual circumstances, a predetermined rate is not subject to adjustment at year end. So any difference between the predetermined and actual rate at year end will be absorbed by the organization. This adjustment would then be coded to an unrestricted element.
Fixed Rate with Carry-forward – as in a predetermined rate, the fixed rate is applied to the financial reports and funding sources are billed accordingly. However “with Carry-forward” means that difference between the fixed and actual costs are carried forward as an adjustment to the subsequent year’s rate computation. In this case the difference would be coded to an asset or liability account. Then in the following year an entry is done clearing the balance sheet account, with the other side of the entry going to an expense account called Under/Over Indirect Costs from PY.
Service Unit Allocations
This selection will be highlighted if you use Supplement #367 Service Unit Allocations and if the service unit pool setup file exists.
This step will formally close the service unit pools in the General Ledger based upon the final YTD Service Unit Allocation Summary.
Note: If your service unit pool element is allocated to elements within the same project, no journal entry is necessary and the pool and allocated amounts will not be displayed.
Note: If any base elements were locked and amounts moved to another element, those elements will also be included in this entry rather than the cost lock entry.
Select the Record button and then print and verify report.
Special Allocations
This selection will be highlighted if you use Supplement #381 Special Allocations/Internal Base and if the special allocation pool setup file exists.
This step will formally close the special allocation pools in the General Ledger based upon the final YTD Special Allocation Summary.
Note: If your special allocation pool element is allocated to elements within the same project, no journal entry is necessary and the pool and allocated amounts will not be displayed.
Note: If any base elements were locked and amounts moved to another element, those elements will also be included in this entry rather than the cost lock entry.
Select the Record button and then print and verify report.
Cost Allocation Locks
This selection will be highlighted if you use Supplement #389 Cost Allocation Locks.
This step will formally post the results of locked amounts to projects in the General Ledger.
Note: If amounts locked in an element are moved to an element within the same project, no journal entry is necessary and the pool and allocated amounts will not be displayed.
Note: If a service unit or special allocation base element was locked, the closing entries for the locked amounts will be a part of allocation closing entries.
Select the Record button and then print and verify report.
Revenue Recognitions
This section will provide you with detailed revenue for projects. You may document specific grant/contract information and post closing entries.
Once a project number is entered, the following information may be entered:
Period:
From and To dates will display from the GL master file
Match Requirements
Enter the % for cash and/or in-kind match required, if applicable.
Completed Project
Put a check here if the project year ended as of or during your fiscal year.
Reimbursable
Put a check here if this project or one or more types of revenue is reimbursed based on actual expenses. Leave blank if it contains grants or contracts as elements.
Fixed Price
Put a check here if this project or one or more types of revenue is reimbursed based on a fixed price contract. Leave blank if it contains grants or contracts as elements.
Performance Based
Put a check here if you get reimbursed for this project or one or more types of revenues received based on the number of units served. Leave blank if it contains grants or contracts as elements.
Note: The above information is used for documentation purposes on the workpapers only. It is not used for any calculation for closing out the projects.
Trial Balance Worksheet
When you click on Trial Balance Worksheet, a list of all unposted GJ batches for the current year will appear. If you have any additional general journal entries other than the ones developed in this supplement that you want to appear under the adjustment column on the Trial Balance Worksheet, check the appropriate unposted batch numbers. All batches that are posted will automatically be included in the opening balance on the Trial Balance Worksheet.
When finished, click on Next.
The General Ledger Trial Balance Worksheet will be displayed.
Print Journal Entry
This will print the General Journal Register for all of the entries you have prepared at this time. If at a later time, you make additional close out entries or redo your entries, they will be made in the same GJ batch. If changes are made, you should print out a new General Journal Register for your files, and dispose of the previous ones.
Post General Journal
Enter the period ending date.
This will post the year end closing entries to the appropriate general journal tables and to the General Ledger.
If changes to these entries need to be made at a later date, be sure to unpost this GJ batch under General Journal before redoing any of the close out steps.
After you have finished with this supplement make sure you process the final month end for the fiscal year. This will provide you with a full set of financial reports including all closing entries.
Year End Closing Entries calculate and prepare journal entries necessary to close the books at year end including:
Accrual of leave costs and distribution of salaries to projects in the General Ledger
Closing the fringe benefit expense amounts and distributing costs to projects in the General Ledger Closing indirect expense amounts and distributing indirect costs to projects in the General Ledger
Closing supplemental allocations such as Service Unit or Special Allocations to projects in the General Ledger
Closing adjustments to projects resulting from the GMS Cost Locks supplement in the General Ledger
Recording revenue recognitions for accounts receivable, deferred revenue or refundable advances and transfers from the general operating account or closing out to a fund balance or net asset account.
Things You Should Know
Coding
All entries to close the cost allocation expense amounts will use program element 997000 so it will not change the actual pools amounts but only close the control accounts in the general ledger.
Once account code information or revenue recognition entries are entered, they are retained and automatically displayed the next time you go into that menu item. If you click on the very first menu item, Prepare for the New Year, you can select to Clear Pools for the year and/or clear Revenue Recognitions for the year.
You may go in and out of different sections as many times as necessary. Click on the X in the upper right to return to the menu.
You may perform some of the sections at different times than others without consequence. For example, you may prepare the closing entries for leave liability adjustments and closing the fringe and indirect expense accounts and control accounts prior to the audit field work. Upon completion of audit testing and processing adjustments, you may go to the revenue recognition section and close out projects. In this case, you do not want to click on Prepare for the New Year. You would just go directly to Revenue Recognitions.
All accounting batches entered prior to preparing the final closing entries must be posted. Since the Year End Closing Entries supplement picks up the amounts posted to the General Ledger, you will receive incorrect information using this supplement if all batches were not posted and monthly processing completed.
Step by Step Instructions
Individual menu items are listed for each activity (Supplemental items will be highlighted only if used). Each section will display applicable accounting information and request necessary account information. After each menu item has been confirmed, you may print out the worksheet for each item. A trial balance worksheet can be printed and final journal entries that were automatically prepared should be printed and posted.
Prepare for the New Year
Are you sure you want to prepare for the new year?
If you click on Yes, you can then select to Clear Pools for the Year and/or Clear Revenue Recognitions for the Year. If you select the Clear Pools for the Year, it will remove any closing entries for pools that exist in tblYearEndClosing. If you select Clear Revenue Recognitions for the Year, it will remove any closing entries for projects in tblRevenueRecognition. Be certain to click Continue after making your selection(s).
The first time you go into YE Closing Entries for a fiscal year, make sure you clear pools for the year and revenue recognition entries prior to preparing any close out entries for this fiscal year.
Salary and Leave Cost
Two steps are performed in this section.
- Recording the change in leave liability for those agencies that accrue leave.
- Closing the salary control account to project equity accounts in the general ledger.
Recording Accrued Leave
If your setup instructions for leave accrual have a checkmark for any leave type, an analysis of each leave liability by class will be displayed. If you do not accrue leave, the comp leave section will be the first to appear.
Beginning Liability
These amounts represent the opening fiscal year liability that are entered manually for the first year on GMS and are rolled forward from that point on during Year End processing. These amounts are reflected in the matrix in Tools\Cost Allocation Setup\Leave Allocation.
Unless manually edited, these amounts will equal your ending liability from the prior fiscal year as well as the General Ledger liability account balance.
YE Valuation
These amounts are calculated from the employee leave balances and rate of pay that was used during the last leave cost allocation process. It should match the last Leave Rate Computation and Analysis that was printed.
Accrual Rate
This is the percent rate established in the setup matrix in Tools\Cost Allocation Setup\Leave Allocation tab.
YE Liability
These amounts equal the year end valuation multiplied by the accrual rate. This amount prints each month under Section 2 of your Leave Rate Computation and Analysis next to Current Liability.
Change in Liability
This amount will reflect the current year adjustment to the accrued leave liability account and is reflected in the automatic journal entry.
GL: Select the liability code for the accrued leave type.
Balance: This amount will represent the current year adjustment to accrued leave in the General Ledger.
Record (specific Leave Type i.e. AL): Print and verify this amount. Note: should you have multiple leave types for which you accrue the cost make sure you repeat this process for those leave types. When all appropriate leave types have been completed, click Next.
Recording Compensatory Time
If your agency records compensatory time, an analysis will be displayed regarding the value of comp earned, taken and balance at the end of the year. If you do not record comp time on your books, this step will be skipped.
---> What is the present accrued comp leave GL code?
Recording Salary Adjustment
---> Where do you wish to charge any adjustment resulting from salary charges?
Note: Usually this is charged to a current year unrestricted element and a miscellaneous expense.
Element
Enter the appropriate element.
GL Code
Enter the general ledger code.
Select the Next button and the Journal entry amounts will be displayed.
Summary of Adjustments to Salaries and Wages
A recap of the adjusting entries for accrued leave and to the general ledger 50000 account will be displayed.
Formally Closing Salary Account 50000
The amounts to close the salary control account to project equity accounts and to the Indirect Cost pool (if applicable) will be displayed.
Select Print and verify amounts.
Fringe Benefit Pool
Two steps are performed in this section.
- Closing the fringe benefit expense amounts to the fringe benefit control account in the General Ledger.
- Closing the fringe benefit control account to project equity accounts in the General Ledger.
The total year-to-date amounts in the fringe benefit pool (credit entries) and the debit to the fringe benefit pool and the debit to the fringe benefit control account will be displayed.
Select Next to proceed.
Based on the YTD Cost Allocation Summary, amounts to be debited to project equity accounts and the indirect cost pool (if applicable) will be displayed.
--> You will be alerted if there are any penny differences between the pool and its allocation. If there are, you will be asked to enter the Element and GL code you wish to charge the difference. Normally, you would enter a current year unrestricted element and a miscellaneous expense code.
Select Print and verify amounts.
Indirect Cost Pool (If Supplement #403 Dual Indirect Cost Pool is installed, menu will state that)
Two steps are performed in this section.
- Closing the indirect cost expense amounts to the indirect cost control account in the General Ledger.
- Closing the indirect cost control account to project equity accounts in the General Ledger.
Total year-to-date amounts for each element in the indirect pool (credit entries) and the debit to the indirect cost control account will be displayed.
Select Next to proceed.
Based on the YTD Cost Allocation Summary, amounts to be debited to project equity accounts will be displayed.
--> You will be alerted if there are any penny differences between the pool and its allocation. If there are, you will be asked to enter the Element and GL code you wish to charge the difference. Normally, you would enter a current year unrestricted element and a miscellaneous expense code.
Select Print and verify amounts.
There are also two situations where the difference between the pool and its allocation are not from rounding and may be substantial. They are when your organization has a Predetermined Rate or Fixed Rate with Carry-forward.
Predetermined Rate – a predetermined rate is applied to the financial reports and funding sources are billed accordingly. Except under very unusual circumstances, a predetermined rate is not subject to adjustment at year end. So any difference between the predetermined and actual rate at year end will be absorbed by the organization. This adjustment would then be coded to an unrestricted element.
Fixed Rate with Carry-forward – as in a predetermined rate, the fixed rate is applied to the financial reports and funding sources are billed accordingly. However “with Carry-forward” means that difference between the fixed and actual costs are carried forward as an adjustment to the subsequent year’s rate computation. In this case the difference would be coded to an asset or liability account. Then in the following year an entry is done clearing the balance sheet account, with the other side of the entry going to an expense account called Under/Over Indirect Costs from PY.
Service Unit Allocations
This selection will be highlighted if you use Supplement #367 Service Unit Allocations and if the service unit pool setup file exists.
This step will formally close the service unit pools in the General Ledger based upon the final YTD Service Unit Allocation Summary.
Note: If your service unit pool element is allocated to elements within the same project, no journal entry is necessary and the pool and allocated amounts will not be displayed.
Note: If any base elements were locked and amounts moved to another element, those elements will also be included in this entry rather than the cost lock entry.
Select the Record button and then print and verify report.
Special Allocations
This selection will be highlighted if you use Supplement #381 Special Allocations/Internal Base and if the special allocation pool setup file exists.
This step will formally close the special allocation pools in the General Ledger based upon the final YTD Special Allocation Summary.
Note: If your special allocation pool element is allocated to elements within the same project, no journal entry is necessary and the pool and allocated amounts will not be displayed.
Note: If any base elements were locked and amounts moved to another element, those elements will also be included in this entry rather than the cost lock entry.
Select the Record button and then print and verify report.
Cost Allocation Locks
This selection will be highlighted if you use Supplement #389 Cost Allocation Locks.
This step will formally post the results of locked amounts to projects in the General Ledger.
Note: If amounts locked in an element are moved to an element within the same project, no journal entry is necessary and the pool and allocated amounts will not be displayed.
Note: If a service unit or special allocation base element was locked, the closing entries for the locked amounts will be a part of allocation closing entries.
Select the Record button and then print and verify report.
Revenue Recognitions
This section will provide you with detailed revenue for projects. You may document specific grant/contract information and post closing entries.
Once a project number is entered, the following information may be entered:
Period:
From and To dates will display from the GL master file
Match Requirements
Enter the % for cash and/or in-kind match required, if applicable.
Completed Project
Put a check here if the project year ended as of or during your fiscal year.
Reimbursable
Put a check here if this project or one or more types of revenue is reimbursed based on actual expenses. Leave blank if it contains grants or contracts as elements.
Fixed Price
Put a check here if this project or one or more types of revenue is reimbursed based on a fixed price contract. Leave blank if it contains grants or contracts as elements.
Performance Based
Put a check here if you get reimbursed for this project or one or more types of revenues received based on the number of units served. Leave blank if it contains grants or contracts as elements.
Note: The above information is used for documentation purposes on the workpapers only. It is not used for any calculation for closing out the projects.
Trial Balance Worksheet
When you click on Trial Balance Worksheet, a list of all unposted GJ batches for the current year will appear. If you have any additional general journal entries other than the ones developed in this supplement that you want to appear under the adjustment column on the Trial Balance Worksheet, check the appropriate unposted batch numbers. All batches that are posted will automatically be included in the opening balance on the Trial Balance Worksheet.
When finished, click on Next.
The General Ledger Trial Balance Worksheet will be displayed.
Print Journal Entry
This will print the General Journal Register for all of the entries you have prepared at this time. If at a later time, you make additional close out entries or redo your entries, they will be made in the same GJ batch. If changes are made, you should print out a new General Journal Register for your files, and dispose of the previous ones.
Post General Journal
Enter the period ending date.
This will post the year end closing entries to the appropriate general journal tables and to the General Ledger.
If changes to these entries need to be made at a later date, be sure to unpost this GJ batch under General Journal before redoing any of the close out steps.
After you have finished with this supplement make sure you process the final month end for the fiscal year. This will provide you with a full set of financial reports including all closing entries.
