Hi Richard

Everything is in balance and the Data Integrity is ok.

Maybe I did not explain my situation clearly. Here is the scenario.

Dec 31, 2020:

Owners Equity:

Retained Earnings Previous year    $800,000

Prior year adjustment                             $500

Current year earnings                      $100,000  

Total Equity                                      $900,500

Jan1 after year-end closing:

Retained Earnings Previous year    $900,000

Prior year adjustment                             $500

Current year earnings                                $0  

Total Equity                                      $900,500

The prior year adjustment does not roll-over to "Retained Earnings Previous year" account. 

What I would like to do is make a journal entry to decrease/close the Prior year adjustment and increase the Retained Earning Previous year. 

Will this cause any integrity issues.

Thanks 

Hi Richard

Everything is in balance and the Data Integrity is ok.

Maybe I did not explain my situation clearly. Here is the scenario.

Dec 31, 2020:

Owners Equity:

Retained Earnings Previous year    $800,000

Prior year adjustment                             $500

Current year earnings                      $100,000  

Total Equity                                      $900,500

Jan1 after year-end closing:

Retained Earnings Previous year    $900,000

Prior year adjustment                             $500

Current year earnings                                $0  

Total Equity                                      $900,500

The prior year adjustment does not roll-over to "Retained Earnings Previous year" account. 

What I would like to do is make a journal entry to decrease/close the Prior year adjustment and increase the Retained Earning Previous year. 

Will this cause any integrity issues.

Thanks 

If I am reading this correctly, the Prior Year Adjustment is a separate G/L account and not an entry already in the account (usually 3560) Retained Earings.

I had assumed the adjustment made to Retained Earnings previously had already been posted to the Retained Earnings account directly.  So I thought it looked like

Owners Equity:

Retained Earnings Previous year    $800,000 + 500 = 800500

Prior year adjustment                             $500

Current year earnings                      $100,000  

Total Equity                                      $900,500

Jan1 after year-end closing:

Retained Earnings Previous year    $900,000

Prior year adjustment                             $500

Current year earnings                                $0  

Total Equity                                      $900,000

And I thought the adjustment you wanted to make was to the income statement.

If the amount should be in Retained Earnings and that will make the balance on your books match the accountant's numbers for your Retained Earnings on your income tax filings, then I would credit the Retained Earnings and debit the Prior Year Adjustment account as you suggest.  I am a little surprised the accountants didn't do this already though.  You might want to pass it by them at this year end.