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Balance sheet

Reconcile Schedules L, M-1, and M-2 with Page 1 income for C Corporations

You can tie Schedules L, M-1, and M-2 balances back to the Page 1 income. Use this procedure when amounts are correct but you need to reconcile rounding differences.
note
UltraTax CS automatically rounds for the following differences for all clients:
  • Assets and liabilities on Schedule L. This is based on the amount entered in the
    Maximum amount for Schedule L rounding
     field in the
    L-2
     screen.
  • Taxable income on Page 1, line 28 and Schedule M-1, line 10. This is based on the amount in the
    Maximum amount for Schedule M-1 rounding
     field the
    Mc
     screen.
  1. Go to
    File
     and open the client.
  2. Select the
    Balance Sheet
     folder, then select the
    Mc
     screen.
  3. Select
    View
    , then
    Return Summary
    . The
    Form 1120 Return Summary
     window shows summary information for key amounts on the return. This tells you which Page 6 totals need to be balanced.
    note
    You can press
    CTRL+Q
     after each step to check that you balanced the appropriate amounts before you go to the next step.
  4. Go to the
    L-2
     screen.
  5. Enter
    0
     if you don't want UltraTax CS to round differences, or a positive number if you want to round differences.
    1. If Schedule M-2, line 8 is less than Schedule L, line 25, enter the difference on Schedule M-2, line 3 (Schedule L, line 25 minus Schedule M-2, line 8).
    2. If Schedule M-2, line 8 is greater than Schedule L, line 25, enter the difference on Schedule M-2, line 6 (Schedule M-2, line 8 minus Schedule L, line 25).
      note
      If you don't enter any end-of-year retained earnings balances in the
      L-2
       screen, UltraTax CS calculates the end-of-year retained earnings based on the information in Schedule M-2. It prints the amount from Schedule M-2, line 8 on Schedule L, line 25. If you enter a rounding tolerance of $10 in the
      L-2
       screen for Schedule L, UltraTax CS automatically creates an adjustment for accounts payable or cash when Schedule L total assets is out of balance with liabilities up to $10.
  6. Go to the
    Mc
     screen.
    1. If Schedule M-1, line 10 is less than Page 1, line 28, enter the difference (Page 1, line 28 minus Schedule M-1, line 10) on Schedule M-1, line 5 as
      rounding
      .
    2. If Schedule M-1, line 10 is greater than Page 1, line 28, enter the difference (Schedule M-1, line 10 minus Page 1, line 28) on Schedule M-1, line 8 as
      rounding
      .
  7. If Schedule L, line 15 does not equal Schedule L, line 28, go to Screen L and adjust end-of-year cash by the difference.

This article applies to:

  • PRODUCT: UltraTax CS
  • Return type: 1120 Corporation
  • Subject: balance-sheet-m1-m3

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