We are filing the final return for our S Corp and I discovered some unapplied payments from previous years. When I went back and applied them it successfully zeroed out the accounts receivable negative balance that I was trying to get rid of but there's about $7,500 of unreported rental income now from those previous years. It shows up as distributions in excess of retained earnings on the schedule M-2 worksheet since we did a final distribution of all remaining funds. Can I just add this amount to the rental income that is reported in the final year to resolve this on the tax return? It seems like this would be the simplest way since you can make journal entries to customer accounts on Quickbooks. Other than this, we're ready to file. Any help would be greatly appreciated!
