Speaker A and Speaker B (Lottie) discussed the January month-end close process and upcoming year-end compilation review. They reviewed outstanding queries across multiple entities (HCR, Avon, Versatile), addressing specific issues including equipment repair payments, vehicle leasing income, and sales tax. The team clarified that Versa will be reimbursed for the $14,500 barn door repair, which should be capitalized and depreciated over 36 months. They also discussed the compilation review requirements, which appear significantly smaller than last year's review and should be completed by April.
The conversation covered several outstanding balance sheet items requiring attention, including debt and asset values for two-family and NC&T properties, ASC 842 lease accounting adjustments, and fixed assets/vehicles. Speaker B committed to sending Versatile and HCR close by tomorrow, with Avon to follow by Thursday. They identified a $40,000 discrepancy in Avon's payroll numbers, which they believe relates to employee tax withholdings that may not be direct company expenses.
Both speakers expressed satisfaction with their progress, noting they are closer to completion than expected. The compilation review timeline was set for a 2-3 week process rather than the 6-8 weeks required last year. Several payroll liability reconciliation issues were discussed, with plans to accrue a 2024 payroll tax adjustment to December 31, 2025, and defer resolution of some small payroll liabilities until Jenny returns.
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How's it going, Lottie?
Hey, going well, and you?
Doing well, doing well.
I just, I don't know, just overwhelmed. Yeah, yeah, but it's all good.
Um, okay, well I don't, I, I was planning going over the queries. Um, outside of that, we got our, the compilation, um, review.
Yes, I saw that.
Okay. You did see that. I wasn't sure if you were on there or not. Um, so we probably want to, we don't have to go over it now, but at some point we'll want to make sure that we're able to do that with the information that we're putting together for the end of the year close. Um, But yeah, why don't we jump into the queries if you have any questions there?
Okay. Sounds good. I think— so I didn't have questions on this for HCR, but there was a question that came up from one of my team members. And she said that— let me just find it. It was Slack. She messaged me for the Blanca del Trinidad equipment repair for the barn door, the $14,500 that got—.
Yeah.
Um, who are we going to end up paying? Are we going to pay Versa? Are we going to pay Blanca so we know which AP to write off?
Oh, we're going to pay Versa.
Okay.
Yeah. So Versa paid for it and we're just going to reimburse Versa for the cost.
Okay, sounds good. I just want to make sure we write off the right one.
Yeah, and then we should capitalize that once, um, like from that invoice, make sure that gets capitalized, and we can depreciate it over— it's probably a pretty— let's say over 36 months.
Okay. Yeah, I'm just going to keep the GL from the blanko one. So, okay.
Yeah, awesome.
For Avon, I was looking through this. I may have questions later. I haven't had a chance to necessarily dig in yet, but for what I did notice though was for the—.
Where.
Is it— for the vehicles, since we don't have statements because we combine everything, how do you want me to do the sales tax and the leasing income?
Um, there should not be any leasing income for the month of January because we're not— there's no interest being accrued for the month of January from our statement, so we wouldn't— and we're not paying anything from it. So, um, yeah, no, there shouldn't be any leasing income.
Okay, yeah, sounds good. Um, the rest of it looks like things that we probably will be looks like it's answered enough for us to complete it. So I think that should be good. And then Versatile, that all looks good as well. I'm hoping to get Versatile and HCR probably done sooner than later and then kind of go into Avon and send that over by Thursday.
So, okay, perfect.
Awesome. And then I did see— oops, that's not what I wanted to do. Hold on, there's too many buttons. I wanted to stop sharing screens, but there's more options there. I did see the compilation. It's a nice shortlist, so I'm excited about that.
Right. I haven't actually opened it yet. Let me take a look and see.
I downloaded it. I haven't looked into it to like see if any of the team members can help me with it yet, but it was, it was not necessarily long, which was fantastic.
No, it'll be a lot smaller than the review last year, I imagine.
Yeah, it's significantly smaller.
Okay, good. Um, all right. It's loading right now, but I'm sure it'll pull up in a second. Um, okay. Is there— so what outstanding items do we have foreclosed? I know we have to make sure that the debt and the asset values for two-family and NC&T are recorded accurately, or at least how we— to tie at the end of the year. Uh, we've kind of been holding off on that. Is there anything else on the balance sheet That's outstanding.
Um, I still need to send RKE the like 842 to kind of review and look over. Like I did all the adjustments to the bet and wrote everything off. So I think it could be correct, but it's probably good for them to also have a second pair of eyes on it.
Right. Okay. That makes sense. And yeah, this, I got it pulled up. This does look This does look good.
Um, yeah, it looks amazing, right? Much more reasonable to last year.
Yeah. Okay, great.
Like, it looks like something that would only take like a few hours, like half a day or something, right?
That's not a week-long project.
No, it looks, it looks really— I saw it and I was like, this looks so nice.
I know.
But it'll probably be a next week item for me. Just, I'm taking Friday off, so. Okay. Yeah. So it's closed this week and then I'll probably be able to dig into it next week.
Got it. Great.
I didn't know if there was a timeline or a deadline for this one.
I think we wanna make sure that we have it all done by April. But I don't— it won't be— I think it's a 2 to 3 week process rather than a 6 to 8 week process. So we can get them the information at kind of just a— I don't want to say a leisurely pace, but not necessarily a sprint to get them everything so they kick off the process.
So, okay.
Yeah, I still need to— I've been pretty busy, but I know that I need to get the balance sheet items done. I just need to carve out a couple hours and finish that up. Um, but outside of that, the 842, um, is there anything else outstanding that you feel like we need to account for?
No. Uh, fixed assets, you know, vehicles, you said you would look into. And then the debt, same thing. And then I'll, I'll email them on 842, and that's pretty much it I can think of. Okay, everything else is done.
Okay, great. All right, if that's the case, then we're closer than I actually thought we.
Were, which is a good.
Sign. Um, okay, and then on the close stuff, yeah, if you have any other questions, let me know about January close, but I think, I think we're in a pretty good spot.
Yeah, since that doesn't have anything, uh, they were all subrentals. I don't see any major issues. Um, there's some weird payroll liabilities things I'm having a hard time reconciling without Jenny, but it's payroll liabilities and it's small enough that I think she can also fix when she gets here. I have a feeling it may be something similar to, um, the Avon one where it's just like maybe it's payroll taxes for last year or something. Yeah.
Okay, I think that— is that what that email said? That was a a payroll tax, or it was payroll taxes from last year?
It was basically in Q4, I think is what it said, that they, they do a chargeback and they do like a reconciliation. And then it was like a withholdings— I think it was a withholdings tax.
Okay. It's almost like a true-up from what they originally budgeted or thought they needed to withhold and that was actually— okay.
Exactly.
Okay.
Do you want us to accrue for that for 2025 or is it fine in January? Since I don't, I don't know if it needs to be on the taxes, I guess is basically what it was.
It for 2025? It was 2025 payroll taxes.
I think so. Yeah.
Yeah, I think let's just put it in. Let's put it in the end of 2025.
And just, okay.
Yeah. Make it a 12/31 charge.
Okay. Will do. So that'll be the only other change, I think.
Yeah. Okay. Okay. And then you did the revenue accrual for HDR already? The accrual deferral? Or is that December? You did. Okay.
I did it. I did it over the weekend. So the accrual deferral should be in there. I have not done the reclass for overhead. That's pretty much the last big thing. So that's why I was saying, I think HDR and, and then I'll look at VersaCell after. Hopefully I can send by like tomorrow. And then Avon will be obviously the last big piece.
That's great. I, well, I'm just, I'm looking at their revenue because I, uh, I didn't know what their revenue would be until we did that accrual deferral. I think I expected it to be around $625 and it's $663, so that's positive.
Oh, nice.
Surprise. Okay. Um, and then I haven't checked. Let me check Versatile. Are we— how are we breaking up the, um, the approval of invoices in RentalWorks to the processing? You guys are doing processing and is Donna doing approval or are you guys doing both?
No, we just do processing. So whenever we type in Approved. And then so she does New, and then there was one after New. I can't remember what the one after New was. She does that one, and then we type in Approved, and then we click Process, and then that's it. And then it should go into Completed after that.
Okay. And you've already done that for January? For Versatile or not yet? Sorry, I'm— all the invoices for January, we have done that, but you have or have not done the accrual and deferral for January yet?
For Versatile, no.
Okay, good, because their revenue is lower than I expected, so I wanted to— I'm trying to just make sure because in coordination with what that, uh, the payroll cost estimate and all that is. I want to make sure that what we're doing and the revenue, like when I say this is where I think we're going to be, we end up close to those numbers. So just to make sure that we're refining that. But if you haven't done it yet, then it's not comparable.
So no, I think, I think I looked at the Avon. So all the payroll numbers were very close except for Avon. And I have a feeling that Avon number has something to do with the taxes. Of for whatever reason. And that's why it's like $30,000 off, I want to say. And I think it's because of taxes somehow, and I can't figure out that part.
Um, let me take a look right now. That is interesting. Oh yeah, that is a lot higher than I expected. Well, um, that's because I'm moving costs from one company to the other, but that's $444 plus— and you've done payroll for Ristyle? There is no payroll for Ristyle. Or there's a little bit, but that's— sorry, $444 plus 228.
Because when I double-check it with our payroll files, it ties with the payroll files. But like, when I add it in QuickBooks just to make sure that ties as well, it was like $40,000 off. And I think, I think it was $30,000 or $40,000 off. And I think it comes from the taxes somehow, but I don't know how or where there's a— that, that's off.
Oh, interesting. It should be— is it 40,000 negative or 40,000 positive?
Let me see. Let me pull up the file.
Because I would have thought so. We were at So, okay, $444,000 plus— yeah, it's about $40,000 lower than what the original— right? Yeah, on the GL.
Yeah, so I think it's a sum of Here, I can share. So I think I tried to look into it when I had some time. I think it's a summary of the T-FIT, the taxes for California, and the taxes for California. I forget what that one stands for.
That's disability, state disability.
Yeah.
Yeah.
Because when I— go to data summary. So that's all of that. Um, oh, I don't have all of that broken down. Um, okay, because when I add up— here we go. So I did T-STAT plus California, so this one was 26.
And then.
This one was 1,000, so that's 27. Oh, this one's already the 40 right there. No. Oh, I don't need the SS. 26 plus 28, that's 54. That's more, but yeah, I wasn't certain where exactly it came from.
California.
Interesting, because what I do with it is— let me find our payroll report. So like, payroll 1, this is a full one, 1/16. So with our journal entries, we have the journal entries here. And then, so our payroll register expense is $180,000. So I pulled the $180,000, sum it up at the very end. So that ties. And then we have our payroll taxes of $42,000. And then 401(k) of $331,035. So then that all totals— this all totals all of that. So I don't know if some of these payroll taxes maybe go straight to payroll liabilities and this maybe not in—.
It'S maybe not a direct expense. Is it possible that that's the employee's share of what they're paying? Like they're paying those taxes and we're not actually hitting that chart, that's not our charge.
Right, and it could be— let's see, class 42. Yeah, so it's not all hitting our charge because I think the journal entry— I'd have to double-check where the journal entry comes from exactly. Yeah, oh, that's why I came up with those because those 3 are at the end here.
Okay.
So I think these go into ours and then these don't. And then I, let's see. Sorry, I probably should have dug in a little bit more.
No, it's okay. I mean, we're just hunting and pecking on the spot.
So yeah. So like 19,000 bit W, 19,000 bit W. Okay. So California and California seems to be $7,000 and then $2,000. Yeah. So maybe we take those out in our calculation in the future. I need to double check with the journal entry.
Okay. At least we estimated to the negative, like higher than we came in. That's a good, that's a good sign. Um, we'll have to, we should check at the beginning of March when we do the February one and kind of just see, like maybe we do one with that charge and one without just to get a range. Um, and then see where we come in.
Yeah, it's not too hard to do that then.
Okay. Okay. Um, I am good. I give you a little time back. So do you have anything else you want to touch on?
Um, no, I don't think so. Let me know if you need anything else.
Okay. I'll keep an eye out for the, uh, for the month-end stuff.
Okay. I forgot about— I forgot about the AR deferral accrued for Bruce's house, so that might just take me a little longer, but I'll try to get HCR at least out probably today if I can.
Okay, great.
Awesome.
Thank you, Lottie. Talk to you later.
Okay. All right, bye.