Enter monthly comparative figures in the Income Statement
Enter monthly comparative figures for the year before your conversion date, by posting a series of monthly manual journals to the revenue and expense accounts. Code the imbalance to the historical adjustment system account. You can then see monthly comparative figures for the year before the conversion without re-entering every transaction in Xero.
Video: Pre-conversion monthly comparatives in Xero (1:55)
Create or import manual journals
You can create or import journals either before or after you've entered your conversion balances. If you have created these journals after entering your conversion balances you need to resave your conversion balances.
Your conversion balances must equal the total of the year-to-date comparative balances. This ensures the month immediately before the conversion date shows correctly on the Income Statement.
ABC Limited is converting to Xero for day-to-day accounting on April 1, 2012 therefore the conversion date is April 2012.
In 2011, the year before using Xero, ABC Limited had the following Income Statement figures. We'll assume each month had the same revenue and expense balances:
- $1,000 sales revenue x 12 months = $12,000 total revenue at year-end.
- $800 light, heating and power expenses x 12 months = $9,600 total expenses at year end.
Create or import a comparative manual journal for April 30, 2011 and one for every subsequent month of the financial year, for example May 2011, June 2011, and so on. Each journal would look like this:
|Historical Expense||Lighting, heating and power||800|
|Adjustment (imbalance)||Historical adjustment||200|
Post a journal entry to account for the $200 imbalance between debits and credits to the historical adjustments system account. This is a Balance Sheet account so it doesn't show on the Income Statement. Xero will now contain complete comparative monthly Income Statement figures.
Go to Settings > General Settings > Conversion Balances and enter the real opening balances at the conversion date of April 1, 2012. Once you've saved these balances Xero reverses out the historical adjustment balance.