To correct the issue:
- Ensure the option Allow Posting to Previous Years is selected In G/L Setup, Options, Posting tab.
- Create a new GL account with the correct Account Type (Income Statement).
- Create a GL entry to transfer the balance from the old account (Balance Sheet) and into the new Income Statement account.
- Select period 12 and the fiscal year the entry is suppose to be posted in the Year/Period field of the journal entry header. Post the entry.
- Mark the old Balance Sheet account as Inactive in G/L Accounts, Accounts, so no additional entries can be posted to this incorrect account.
- Repeat step 2 to 5 for each account that was setup incorrectly as a Balance Sheet account.
Note: Do not run the Create New Year function again. The system will recognize the entry is posted to a prior year and will update the Retained Earnings account.