# Tri-County Tire LLC — Cleanup Engagement Master Plan

**Prepared by:** Ledger
**Date:** 2026-05-24
**Scope:** Jan 1 2025 → present, in-place cleanup of existing QBO file
**Authority:** Bank account access granted; cross-team coordination authorized
**File:** Slug `tri-county` | Realm `9341455601828551` | Tier: non-chairman, no ceiling

---

## 1. Executive Summary

The Tri-County Tire QBO file was created in January 2025 with **only one opening balance entered** (Royal Bank checking $197,931). Over the following 16 months, transactions were posted in a way that grew the Opening Balance Equity (OBE) account from $197K to **$3.23M** — meaning OBE has been used as a dump-account for unbalanced entries the entire life of the file. On top of that:

- There are **two parallel A/R systems** (QBO module + custom GL) and a third entry for an $830K owner loan misclassified into AR
- The customer master has **8 records total for a $7-8M revenue business** — confirming sales are summary-posted from a tire-shop POS, with dummy "customers" used to balance JEs
- The vendor master has duplicate records inflating AP visibility (KM TIRE 1 & 2 alone = $365K, COUNTRYWIDE TIRE × 3)
- Inventory uses both a parent account with $1.73M of direct posts *and* seven subaccounts with their own balances — guaranteed double-counting
- Fixed assets are negative ($-77K) with no accumulated-depreciation accounts at all
- 216 active COA accounts — roughly 3-5× normal for this business size, with custom GLs that duplicate native QBO features

**The books are arithmetically balanced ($7.24M debits = $7.24M credits) but structurally fictional.** Reports run today look superficially clean — that's the worst kind of broken because it gives false confidence.

**This plan organizes the cleanup into 11 phases (Phase 0 through Phase 10), sequenced with explicit dependencies.** Total effort is substantial: realistically 8-14 weeks of execution time once external inputs land, gated on client responsiveness and bank-statement availability. Effort is concentrated in Phases 2 (bank rec), 6 (inventory), and 5 (vendor master), which together carry the largest transaction volume.

---

## 2. Confirmed Findings

### 2.1 The conversion event
| Date | Event |
|------|-------|
| ≤ 1/31/2025 | QBO file created with one opening entry: Royal Bank TCT CHECKING $197,931 ↔ OBE $197,931 |
| 1/31/2025 → 4/30/2026 | OBE grew from $197,931 to $3,232,052 (+$3.03M) |
| Throughout | No 12/31/2024 trial balance exists in this file (BS pull returns NoReportData) |

**Implication:** Every asset, liability, and equity account on the current BS — except the $197K initial cash — was built up through ongoing transactions, NOT through proper opening-balance entries. The "anchor" for this cleanup must be reconstructed from external sources (prior accounting system, 2024 tax return, bank statements).

### 2.2 Balance Sheet structural findings (April 30 2026)

| Account / Section | Balance | Issue |
|-------------------|--------:|-------|
| Cash on hand | $500 | Likely an unreconciled placeholder; no real petty cash kept at $500 flat |
| Royal Bank TCT CHECKING | $127,528 | Last reconciled date unknown — needs verification in Phase 2 |
| Due from Owner Riley (in AR header!) | $830,317 | Owner loan misclassified into Accounts Receivable section |
| Interest from Owner Riley | -$4,926 | Contra-asset for accrued interest; likely partial attempt at imputed interest |
| Accounts Receivable (Tireshop) — custom GL | $482,397 | Shadow AR system parallel to QBO module |
| QBO AR module total | $825,392 | $844K is one customer ("Tri-County Tire LLC" = the company itself) |
| Inventory parent | $1,731,567 | Direct posts to parent + subaccounts = double-count |
| Inventory: New Take Off | -$6,170 | Negative inventory — sold what wasn't received |
| Inventory: Used | -$8,650 | Same issue |
| Undeposited Funds (Tireshop) tree | $402,751 | Custom UF clearing — should have cleared weekly; hasn't |
| Vendor Credits Clearing | $3,079 | Custom clearing — should be zero |
| Large Equipment Purchases (Fixed Assets) | -$77,447 | Negative fixed asset; no accumulated depreciation accounts exist |
| Opening Balance Equity | $3,232,052 | Should be ~$0 after proper file setup |
| Retained Earnings | -$409,546 | Negative — but this is meaningless given the OBE mess |

### 2.3 Customer master (8 active customers total)

| ID | Name | Balance | Created | Issue |
|---:|------|--------:|---------|-------|
| 184 | Tri-County Tire LLC | $844,392 | 2026-01-28 | Company itself listed as customer — JE dump-account |
| 215 | Riley Nolt | -$35,000 | 2026-02-10 | Owner — already tracked in "Due from Owner Riley" GL |
| 217 | Opening Balance Customer | $0 | 2026-02-11 | Literal placeholder |
| 211 | Toyo Tires | $0 | 2026-02-08 | Likely a vendor miscoded as customer; verify |
| 300 | Warren Burkolder / Burkholders Tire Service | $16,000 | 2026-04-15 | Only real receivable |
| 307 | Tire King | $0 | 2026-04-22 | Verify |
| 308 | Midwest Industrial Tire LLC | $0 | 2026-04-22 | Verify |
| 332 | Nutrien AG Solutions | $0 | 2026-05-06 | Verify |

**Implication:** Sales are not invoiced through QBO at customer level. Daily/monthly sales totals are JE'd from the tire-shop POS, with dummy customers absorbing balancing entries.

### 2.4 Vendor master findings (from AP aging — full master too large to load)

Confirmed duplicates and issues:
- **KM TIRE 1** ($269,408) + **KM TIRE 2** ($95,967) — almost certainly same vendor, $365K combined open
- **COUNTRYWIDE TIRE** ($3,678) + **COUNTRYWIDE TIRE - 1** ($4,829) + **COUNTRYWIDE TIRE - 2** ($1,757) — same vendor split into 3
- **NTS TIRE SUPPLY** -$5,093 — unapplied vendor credit
- Multiple other negative balances (Advance Auto, Turn 14, others) — unapplied credits
- AP module on BS ($608K Apr 30) vs aging today ($825K) — $217K delta needs reconciliation

### 2.5 P&L sanity (YTD Jan-Apr 2026 from Trial Balance)

| Metric | Amount | Notes |
|--------|-------:|-------|
| Sales (YTD, from TB sales accounts) | ~$2.7M+ | Annualized: $7-8M |
| Tire Sales alone | $1,990,485 | 73% of revenue |
| Inventory Adj/Corr (credit to COGS) | $99,452 | $100K of manual inventory journals YTD — symptom, not solution |
| Discounts (debit) | $47,058 | Reasonable but worth confirming POS-derived |
| Uncategorized Income | $16,638 | Needs reclassification |
| Uncategorized Expense | $41 | Tiny — fine |
| Cash Over/Under | -$515 (cr) | Normal register variance |

**The business itself appears healthy** (30%+ gross margin, double-digit net margin). The cleanup is about making the books *reflect* the business, not fix the business.

---

## 3. Scope Statement

| | |
|---|---|
| **Period** | January 1, 2025 → present (current period) |
| **Approach** | Fix-in-place — work the existing QBO file; cannot create new file (company is already in QBO) |
| **Restatement** | All 2025 + 2026 YTD activity restated as needed |
| **Out of scope** | Pre-2025 history (file has no pre-2025 transactions anyway); 2024 tax return amendment unless cleanup reveals specific cause |
| **Tax-side support** | Coordinated with Rex; we don't file/sign |
| **Client-facing communication** | Stays with Jimmie; Ledger surfaces findings, Jimmie owns the conversation |

---

## 4. External Inputs Needed

These need to be in hand (or in motion) before Phase 1 can fully execute. Listed by source:

### From the client / owner
- [ ] **12/31/2024 trial balance from prior accounting system** (whatever was used before this QBO file) — critical anchor
- [ ] **2024 tax return** (Form 1120, 1120-S, 1065, or Schedule C depending on entity) — second-source anchor for equity, depreciation, owner loan
- [ ] **Confirmation of entity structure** (LLC taxed as what?) — affects owner-loan treatment in Phase 4
- [ ] **Owner-loan history & terms** for Riley Nolt: when did draws start, written loan agreement (if any), repayment schedule (if any), interest rate (if stated)
- [ ] **Fixed asset list with purchase dates, costs, and method** — for Phase 7 register rebuild
- [ ] **Physical inventory count or most-recent count date** — for Phase 6
- [ ] **Sales tax filing history** — confirm $18,771 outstanding sales tax is current, not delinquent
- [ ] **Payroll provider name & access** (Rippling? Gusto? ADP?) — for Phase 6 reconciliation of payroll JEs
- [ ] **Tire shop POS / management software identification** (line item "Tire Shop Software" $4,654 YTD in books) — needed for Phase 3 sales-summary reconciliation

### From Jimmie's bank access
- [ ] **Royal Bank TCT CHECKING (5704)** statements: Jan 2025 → most recent close
- [ ] **Royal Bank TCT LOC (4020)** statements: same period (currently zero balance on books — confirm)
- [ ] **Capital One CLUB Business (0728)** statements: Jan 2025 → current
- [ ] **Ramp Card** statements: Jan 2025 → current (or from card open date)
- [ ] Any other accounts not yet visible in books

### From prior bookkeeper / accountant (if accessible)
- [ ] **Conversion notes / cutover memo** from when QBO file was created in early 2025
- [ ] **Prior system export** (Sage 50? QuickBooks Desktop? Excel?) for 2024 detail if available
- [ ] **List of any work-in-progress cleanup items** they were aware of

### From the QBO file itself (Ledger pulls during Phase 0)
- [x] First-pass diagnostic (delivered 2026-05-24)
- [ ] Account-level GL detail for OBE account 56 (15M chars saved; needs subagent analysis to extract entry pattern)
- [ ] JE list for full scope window (16K rows saved; needs subagent extraction for poster patterns and entry types)
- [ ] Full vendor master extract (187KB file saved; needs jq/python extraction to enumerate ~200 vendors and identify dedupes)
- [ ] Account creation date history (when was each custom account first created? hints at when shadow workflow was built)

---

## 5. The 11 Phases

Each phase below: **scope · prerequisites · approach · deliverables · risks · estimated touch count**.

Effort estimates are deliberately ranges, not point-estimates — too much depends on external inputs we don't yet have.

### Phase 0 — Scope alignment & external inputs (Task #1, in_progress)

**Scope:** Confirm engagement scope with the client, gather every external input listed in §4, loop in Rex (tax) and Cord (reconciliation workbook infrastructure).

**Prerequisites:** Jimmie's go-ahead (received 2026-05-24).

**Approach:**
1. Jimmie sends this plan to the client; gets confirmation of scope, owner-loan facts, and inventory count timing
2. Jimmie pulls bank/credit-card statements via his access (Phase 2 won't start without these)
3. Ledger drafts and dispatches handoffs to Rex (owner loan + depreciation tax framing) and Cord (reconciliation workbook design)
4. Ledger runs deeper QBO probes to characterize the OBE entry pattern and JE poster identity (subagent reads of the saved files)
5. Once 80%+ of inputs are in hand, Phase 1 unblocks

**Deliverables:** Inputs checklist tracker (this file's §4); Rex handoff; Cord handoff; OBE-pattern analysis brief; vendor-master dedupe spreadsheet.

**Risks:** Slow client response is the biggest risk to the whole plan; without prior-system 12/31/2024 records, Phase 1 has to substitute estimates which weakens every downstream phase.

**Estimated touch count:** Low GL impact (mostly research); high coordination overhead.

---

### Phase 1 — Establish the anchor: proper 12/31/2024 opening balances (Task #2, blocked by Phase 0)

**Scope:** Reconstruct what the true 12/31/2024 trial balance *should* have been when the QBO file was opened. Use this as the bedrock all subsequent restatements roll up to.

**Prerequisites:** 12/31/2024 prior-system TB and/or 2024 tax return from client; first vendor-master and customer-master pulls complete.

**Approach:**
1. Build a target 12/31/2024 trial balance from prior-system data: cash (multiple accounts likely), AR aging, AP aging, inventory by category, fixed assets (gross + accumulated depreciation), loans, owner equity, retained earnings
2. Compare to what currently sits in the QBO file at 1/1/2025 (essentially: $197K cash, $197K OBE, nothing else)
3. Calculate the restatement entry: debit each asset, credit each liability, post the remaining residual to Owner Equity / Retained Earnings to clear OBE proportionally
4. **Do NOT post yet** — this entry stays in draft until Phases 2-7 confirm the in-period activity. The opening entry gets posted as part of Phase 9 (Equity reset), after all transactional cleanup is complete

**Deliverables:** Target 12/31/2024 trial balance spreadsheet; restatement JE draft (held); reconciliation between draft and current QBO 1/1/2025 state.

**Risks:** If the client cannot produce prior-system records and 2024 tax return doesn't break down by account, we estimate aggregate categories and lose precision. This is the highest-impact precision risk in the engagement.

**Estimated touch count:** One large opening JE (gets posted in Phase 9); lots of reconciliation work upstream of that.

---

### Phase 2 — Bank reconciliation (Task #3, blocked by Phase 1)

**Scope:** Reconcile Royal Bank TCT CHECKING (acct 145), Capital One CLUB Business (acct 147), Ramp Card (acct 154), Royal Bank TCT LOC (acct 146) month-by-month from Jan 2025 → current month-end.

**Prerequisites:** Anchor opening balance from Phase 1; bank statements from Jimmie's access.

**Approach:**
1. For each account: pull QBO register, get matching bank statement, run formal reconciliation per month
2. Identify uncleared/stuck items: especially the **$402K stuck in Undeposited Funds (Tireshop)** subaccount tree
3. Trace UF clearing: which deposits in the bank match which UF entries? Net the entries that *did* clear; investigate the residue
4. Identify and fix bank entries posted to wrong accounts (likely many, given the JE-heavy posting pattern)
5. Document monthly reconciled difference until it's $0 every month
6. Coordinate with Cord on a reconciliation tracker in Sheets if multi-account multi-month tracking warrants it (likely it does)

**Deliverables:** Monthly bank rec reports (×4 accounts × 17 months = ~68 individual recs); UF clearing analysis; list of misposted transactions for Phase-by-Phase reclassification.

**Risks:** Volume. If checking has 2,000+ transactions/year in a $7-8M business, that's 3,000+ transactions to reconcile across the scope window. Subcontracting to a dedicated reconciliation tool (Booker? Wrangler? scripted matching?) may be warranted — talk to Slate.

**Estimated touch count:** Hundreds of reclassification JEs; possibly 50-100 correction entries; baseline truth for everything else.

---

### Phase 3 — AR system unification (Task #4, blocked by Phase 2)

**Scope:** Eliminate the parallel AR systems. Decision: which is the single source of truth?

**Recommendation:** Keep QBO native AR module; eliminate "Accounts Receivable (Tireshop)" custom GL ($482K). Post summarized POS sales as JEs that hit the QBO AR module (using a single "POS Daily Sales" customer per location) instead of a non-AR GL.

**Prerequisites:** Phase 2 cash reconciled (so we know which POS deposits actually hit the bank); decision from Jimmie/client on AR approach.

**Approach:**
1. Identify what the $482K "AR (Tireshop)" balance represents (likely uncollected POS sales from real customers tracked in the POS, not QBO)
2. If those customers exist only in the POS and not in QBO: replace the custom GL with QBO AR module entries against a single "POS Daily Sales" placeholder customer, OR import top N customers to QBO and bill individually
3. Resolve **customer 184 "Tri-County Tire LLC" $844K**: identify what JEs landed here, reverse and post correctly. Then deactivate the dummy customer.
4. Resolve **customer 217 "Opening Balance Customer"**: should not exist; deactivate after confirming zero balance
5. Move **customer 215 "Riley Nolt" -$35K** out of AR entirely — credit goes to the Owner Loan account (Phase 4)
6. Verify customers 211, 307, 308, 332 are real customers vs. miscoded placeholders; reclassify or deactivate

**Deliverables:** AR reconciliation memo; reclassification JEs for the $482K shadow AR; customer master cleanup list; updated AR aging post-cleanup.

**Risks:** If individual customer-level AR tracking is genuinely needed for collections, the POS-summary approach won't work and we need a heavier integration with the POS. Talk to Riv about whether the tire shop software has an export/API.

**Estimated touch count:** 20-50 reclassification JEs; customer master cleanup (~3-5 deactivations); ongoing process change.

---

### Phase 4 — Owner loan cleanup (Riley Nolt $830K) (Task #5, blocked by Phase 1)

**Scope:** Properly classify and account for the $830K Due from Owner Riley balance. Loop Rex for tax-side analysis.

**Prerequisites:** Owner-loan facts from client (when did draws start, written terms, intended treatment, AFR election if any); 2024 tax return showing prior-year owner-loan balance.

**Approach:**
1. Reclassify "Due from Owner Riley" (id 1150040082) out of the AR section — create proper "Notes Receivable - Owner" or "Loan Receivable - Riley Nolt" account in Other Assets
2. Audit growth pattern: pull GL detail for the account month-by-month from 1/1/2025; identify each draw and any repayments
3. Calculate AFR-based imputed interest for the period the loan has been outstanding (use AFR table; short-term/mid-term/long-term depending on terms)
4. Reconcile or replace "Interest from Owner Riley" -$4,926 (already in AR header — confused account)
5. **Loop Rex** for:
   - Entity structure implications (deemed distribution risk if S-corp; salary reclassification risk if growing & not repaid; bona-fide loan defense)
   - Below-market loan rules (§7872) — imputed interest treatment for both parties
   - Whether the 2024 tax return already accrued any of this and we need to reconcile
6. Post adjusting entries for accrued interest receivable monthly going forward

**Deliverables:** Reclassification JE; imputed interest schedule; Rex tax memo on owner-loan posture; client decision document on whether to formalize (loan agreement, repayment plan).

**Risks:** Tax exposure if owner has been treating this as draws and IRS reclassifies; both prior and current year may be affected. Rex needs to weigh in early.

**Estimated touch count:** 1 reclass JE for the $830K balance; 12-17 monthly accrued-interest JEs; tax memo.

---

### Phase 5 — Vendor master cleanup & AP reconciliation (Task #6, blocked by Phase 2)

**Scope:** Merge duplicate vendors, apply unapplied credits, reconcile AP module to vendor statements, resolve the $217K module-vs-aging discrepancy.

**Prerequisites:** Phase 2 cash reconciled (need to know which bills were actually paid); full vendor master extract from saved file.

**Approach:**
1. Pull full vendor list from saved 187KB file (use jq or python in a subagent — there are ~200 records)
2. Identify confirmed duplicates: KM TIRE 1 + KM TIRE 2 ($365K combined open); COUNTRYWIDE TIRE × 3; scan for others by fuzzy-matching display names
3. Get vendor statements from at least the top 10 vendors by AP balance (most are major tire distributors: KM Tire, Colony Tire, American Omni, American Tire Distributors, Taskmaster, OTR, Pomp's, US Autoforce, Wheel Pros)
4. Reconcile QBO open bills + credits to each vendor's statement of account; identify missing bills, duplicate bills, misapplied payments
5. Apply outstanding vendor credits (NTS Tire -$5K, Advance Auto, Turn 14, others) to oldest open bills per vendor
6. Resolve "Vendor Credits Clearing" $3K balance — should go to zero after Phase 5
7. Merge duplicate vendor records via QBO's merge tool (after verifying transaction histories are compatible)

**Deliverables:** Vendor reconciliation memo (top 10 vendors); merge log (which vendors merged into which surviving record); list of bills to be posted/voided/reclassified; cleaned AP aging.

**Risks:** Vendors may not provide clean statements quickly; some smaller vendors may not respond. We may need to accept "best available reconciliation" for tail vendors.

**Estimated touch count:** 50-150 corrections (credit applications, missing bill entries, payment reapplications); 5-10 vendor merges.

---

### Phase 6 — Inventory rebuild (Task #7, blocked by Phase 2)

**Scope:** Reconcile inventory subledger to physical/POS reality. Fix the parent-as-poster anti-pattern. Eliminate the "Inventory Adj/Corr" manual-fix pattern.

**Prerequisites:** Physical inventory count or POS subledger snapshot from client; Phase 2 cash reconciled (so vendor bills for inventory are tied out); decision on inventory valuation method (FIFO/Avg/Specific Identification — likely Average if POS-driven).

**Approach:**
1. Get current physical or POS-derived inventory snapshot from client
2. Roll back QBO inventory to a known starting point (1/1/2025 or earliest reliable date)
3. Walk forward month-by-month, posting purchases from bills and sales from POS summaries; track inventory movement vs the manual "Inventory Adj/Corr" entries that have been compensating
4. Resolve **parent-as-poster** issue: pick one of two approaches:
   - **(A)** Move all the $1.73M of direct posts on the Inventory Asset parent down to the appropriate subaccounts (Tire, Wheel, Part, etc.) — requires extensive reclassification but preserves the subaccount structure
   - **(B)** Collapse to a single Inventory Asset account, no subaccounts — simpler, but loses category-level detail
   - **Recommendation:** Option (A) — tire shop benefits from category-level inventory visibility; just enforce posting discipline
5. Clear negative subaccount balances (New Take Off -$6K, Used -$8K) by posting the missing receipts or by writing them off if truly lost
6. Stop using "Inventory Adj/Corr" as a routine COGS-fix; reserve only for true inventory shrinkage at physical counts
7. Set up a monthly inventory count cadence going forward (Phase 10)

**Deliverables:** Inventory rebuild worksheet (large spreadsheet); reclassification JEs; cleaned inventory subledger; new inventory close procedure document.

**Risks:** This is the largest data-volume phase. If the tire shop POS doesn't export clean inventory data, we're working from physical counts and may discover material shrinkage/loss. Engage Riv to evaluate whether the POS has an API or export.

**Estimated touch count:** 100-300 reclassification entries; multiple monthly cycle counts to rebuild; this is the heaviest phase.

---

### Phase 7 — Fixed asset register & depreciation rebuild (Task #8, blocked by Phase 1)

**Scope:** Build a proper fixed asset register from scratch. Set up accumulated-depreciation infrastructure. Book missing 2025 depreciation. Resolve the negative Fixed Assets balance.

**Prerequisites:** Fixed asset purchase records from client (invoices, dates, amounts); 2024 tax return depreciation schedule (form 4562 or equivalent); Rex's tax depreciation method recommendation.

**Approach:**
1. Get purchase records from client for all fixed assets acquired pre-2025 (still on books) and during 2025-2026
2. Build a fixed asset register: asset name, purchase date, cost, salvage value, useful life, method (book + tax), monthly/annual depreciation
3. Set up COA: separate gross-cost accounts and accumulated-depreciation contra accounts; depreciation expense account
4. Reverse the negative "Large Equipment Purchases" entry (-$77,447) — figure out what it was supposed to represent (depreciation? disposal?) and post properly
5. Calculate missing book depreciation for 2025 + 2026 YTD; post monthly entries
6. Coordinate with Rex on book/tax differences; track Section 179 / bonus depreciation elected on 2024 return
7. Establish monthly depreciation auto-entries going forward (Phase 10)

**Deliverables:** Fixed asset register spreadsheet; COA changes for FA section; depreciation JEs (16-17 months back-posted); Rex tax depreciation memo.

**Risks:** Client may not have clean purchase records; we may need to estimate or use cost-segregation defaults. Watch for assets fully expensed via §179 that shouldn't have depreciation entries.

**Estimated touch count:** 5-15 fixed asset additions; 16-17 monthly depreciation entries; possibly a few disposal entries; reversal of the negative entry.

---

### Phase 8 — COA rationalization (Task #9, blocked by Phase 0)

**Scope:** Reduce 216 active accounts to a target ~80. Eliminate custom GLs that duplicate native QBO features. Fix parent-as-poster pattern across all sections. Document mapping from old → new for audit trail.

**Prerequisites:** Phase 0 client agreement on COA approach (client should approve any visible reporting changes); can run in parallel with Phases 2-7 but easier if done after them so we know which accounts are actually used.

**Approach:**
1. Pull full COA from saved file (216 entries, ~116KB JSON) — use subagent to extract by category
2. Build a target COA: ~80 accounts mapped against industry-standard tire-shop / auto-service template, customized for Tri-County's actual operations
3. Map each existing account to a target account: keep, merge, deactivate, or restructure
4. Eliminate custom GLs that duplicate native features:
   - "Undeposited Funds (Tireshop)" tree → native Undeposited Funds (use through Receive Payment workflow)
   - "Vendor Credits Clearing" → native Vendor Credit
   - "Customer AR Adj/Corr" → credit memos
   - "Paid In/Out Clearing", "NSF Clearing" → handled via native deposit/refund flows
5. Fix parent-as-poster: for every parent with direct posts AND children with posts, move parent posts down to children (or to a "[Parent]: General" subaccount)
6. Consolidate redundant accounts: multiple Rent parents → single Rent with subaccounts; redundant Software & apps subaccounts → consolidate
7. Document a mapping table (old account ID → new account ID + reason) as the audit trail
8. Execute via QBO account merges (where two accounts collapse to one — sums their histories) or via reclassification JEs (where a structural move is needed)

**Deliverables:** Target COA spreadsheet; old→new mapping table; merge log; reclass JEs; final cleaned COA ≤80 active accounts.

**Risks:** QBO account merges are one-way and irreversible. Need to confirm each merge plan in writing before executing. Also: any historical reports run after the merges will reflect the new structure, which may surprise client or prior accountant if they pull comparatives.

**Estimated touch count:** 100-130 account changes (deactivations, merges, restructures); a handful of large reclass JEs.

---

### Phase 9 — Equity reset & OBE clear-out (Task #10, blocked by Phases 3-8)

**Scope:** After all asset and liability accounts are properly stated, clear the remaining OBE balance to Retained Earnings / Owner Equity. Post the proper opening entry drafted in Phase 1.

**Prerequisites:** Phases 3, 4, 5, 6, 7, 8 all complete. This is intentionally the LAST cleanup phase — only possible once everything else is right, because OBE is the residual that absorbs all the other restatements.

**Approach:**
1. Post the Phase-1 drafted opening JE (proper 12/31/2024 opening balances) — debits to all assets, credits to all liabilities, balancing equity entries to Owner Contributions / Retained Earnings / Prior Period Adjustments as appropriate
2. Run a fresh 12/31/2024 trial balance and compare to the prior-system / tax-return anchor — they should match within rounding
3. Run a fresh 1/1/2025 trial balance and verify it matches the new opening entry
4. Calculate residual OBE balance after the opening JE posts — should be very close to zero. Any remaining is "true unexplained variance" which becomes a Prior Period Adjustment to Retained Earnings
5. Run 12/31/2025 BS and validate: does YTD 2026 Net Income + new opening RE + Owner Contributions = current equity? If yes, the equity section is now valid
6. Confirm OBE final balance = $0
7. Lock the historical periods (use QBO Close Books feature with password) to prevent future contamination

**Deliverables:** Opening entry JE; residual OBE clear JE; 12/31/2024 final TB; 12/31/2025 final TB; equity-section reconciliation memo; closed-period log.

**Risks:** If Phase 1 anchor is uncertain (client couldn't produce prior-system records), the residual to RE is bigger than ideal and we have to be transparent about that. Also: any new error discovered after Phase 9 means reopening the closed periods, which is procedurally painful — be thorough in Phases 2-8.

**Estimated touch count:** 2-4 large JEs; multiple validation TB pulls.

---

### Phase 10 — Forward-state validation & ongoing close discipline (Task #11, blocked by Phase 9)

**Scope:** Validate the cleanup held by running a clean monthly close on April 2026 and May 2026 books. Establish recurring close discipline. Set up BvA baseline. Document everything for ongoing maintenance.

**Prerequisites:** Phase 9 complete; bank statements for April + May 2026.

**Approach:**
1. Run a full month-end close on April 2026: bank rec, credit card rec, accruals, prepaid amortization, depreciation, inventory adjustments, AP/AR aging review, sales tax accrual, owner loan interest accrual
2. Validate: no Uncategorized Income/Expense balances; no parent-as-poster postings; no use of retired custom GLs; no shadow AR usage; no manual "Inventory Adj/Corr" entries
3. Repeat for May 2026
4. Build a Tri-County-specific monthly close checklist (specific accruals, POS reconciliation steps, inventory count cadence, owner loan handling)
5. Set up Coefficient / live QBO connection for BvA reporting; build baseline budget from 2025 actuals
6. Document the cleaned COA, the close procedure, and the ongoing maintenance protocol for handoff to whoever maintains this client on an ongoing basis
7. Final cleanup-engagement close-out memo: what was changed, what was found, what remains as known risks, what 2024 amendments (if any) the client should consider

**Deliverables:** April + May 2026 close packages; close checklist document; BvA baseline; ongoing maintenance documentation; final close-out memo.

**Risks:** This phase is fast IF Phases 1-9 went well. Slow IF cleanup needs revisiting.

**Estimated touch count:** 2 monthly closes; ongoing process.

---

## 6. Sequencing & Dependencies

```
Phase 0 (Scope/Inputs)
   └─→ Phase 1 (Anchor)
         ├─→ Phase 2 (Bank Rec) ──┬─→ Phase 3 (AR)
         │                        ├─→ Phase 5 (Vendor/AP)
         │                        └─→ Phase 6 (Inventory)
         ├─→ Phase 4 (Owner Loan) ─┐
         └─→ Phase 7 (Fixed Assets)─┤
                                    │
         Phase 8 (COA) ─────────────┤  (runs alongside Phases 2-7)
                                    │
                                    └─→ Phase 9 (Equity Reset)
                                          └─→ Phase 10 (Validation)
```

**Critical path:** Phase 0 → Phase 1 → Phase 2 → Phase 6 (inventory rebuild is the slowest) → Phase 9 → Phase 10.

**Phases that can run in parallel:** 3 & 5 & 6 & 7 (after Phase 2). 8 can run alongside any of them.

---

## 7. Team Coordination

| Member | Role | When |
|--------|------|------|
| **Ledger** (me) | Engagement lead; executes cleanup; owns the books | All phases |
| **Jimmie** | Client-facing decisions; bank statement pulls; engagement letter scope; sign-off on each phase | Phase 0 setup; gate at end of each phase |
| **Rex** | Tax framing for owner loan (Phase 4); depreciation method (Phase 7); review of any restatement that affects 2024 tax positions | Phases 4 and 7 |
| **Cord** | Build reconciliation workbook in Sheets / Coefficient if Phase 2 volume warrants; live QBO data for ongoing BvA in Phase 10 | Phases 2 and 10 |
| **Riv** | If the tire shop POS has an API or export, evaluate integration for ongoing sales-summary posting (Phase 3); investigate any Capital One / Ramp connectors for AP automation if useful | Phases 3 and 5 |
| **Slate** | If reconciliation volume warrants, evaluate FinOptimal Booker for batched correction-entry posting through the cleanup phases | Phase 2 if scaling needed |

Handoffs to Rex and Cord drafted as part of Phase 0; saved to `_Handoffs/2026-05/`.

---

## 8. Decisions Needed from Jimmie

Listed in priority order:

1. **Engagement letter scope check.** Does the existing client engagement cover cleanup of this magnitude, or do you need to scope-expand the engagement with the client first? My recommendation: scope it explicitly — this is a multi-month project, materially larger than monthly bookkeeping.

2. **Client communication timing.** When does the client get told what we've found? Recommendation: brief but blunt summary from you within 1 week, with this plan as the supporting document. The owner needs to surface the loan documentation question and the prior-system records before we can start Phase 1.

3. **Tier ceiling on writes.** Given the volume of cleanup writes expected (hundreds of JEs across phases), do you want a tier ceiling on `tri-county` to keep the queue manageable, or leave it open? Recommendation: leave open for now; revisit if queue review starts taking >30 min/week.

4. **Subcontracting reconciliation tooling.** Do you want Cord to build a Sheets-based recon workbook upfront (Phase 2 prep), or wait until we see if it's needed? Recommendation: build upfront — the recon volume justifies the build cost.

5. **Tire shop POS investigation.** Want Riv to spend a bit of time identifying which POS software is in use ("Tire Shop Software" $4,654 YTD line item) and whether it has an export API? Recommendation: yes, even if we don't integrate it now; identifying it informs Phases 3 and 6 dramatically.

---

## 9. Open Questions / Risks

| # | Risk | Severity | Mitigation |
|---|------|----------|------------|
| 1 | Client can't produce prior-system 12/31/2024 records → Phase 1 anchor is estimated → everything downstream loses precision | High | Use 2024 tax return as second-source anchor; if both unavailable, flag in close-out memo as "cleanup performed on best-available data" |
| 2 | Owner loan triggers IRS reclassification | High (tax) | Rex review in Phase 4 BEFORE any 2025 tax planning; consider proactive loan formalization with client |
| 3 | Tire shop POS has no export/API → Phase 3 (AR) must remain summary-JE-driven | Medium | Acceptable; document the workflow and POS reconciliation cadence |
| 4 | Inventory physical count reveals material shrinkage | Medium (financial) | Surface immediately to Jimmie + client; book write-down with full audit trail; tax implications via Rex |
| 5 | Phase 2 bank rec volume too high for manual handling | Medium | Engage Slate for FinOptimal Booker batching, or scripted matching via Riv |
| 6 | Sales tax filings are delinquent ($18,771 outstanding) | Medium | Verify filing status in Phase 0; if delinquent, surface as separate urgent thread |
| 7 | Client wants to limit scope mid-engagement (cost/time pushback) | Medium | Phase-gated plan allows clean stop points; document residual risks at any stop point |
| 8 | Concurrent posting by prior bookkeeper / staff during cleanup contaminates work | Low-Medium | Lock historical periods as each phase completes; require all new posts route through Ledger queue |
| 9 | The 530K-line OBE GL contains entry patterns we haven't yet characterized — may reveal additional issues | Low | Subagent analysis of the OBE GL in Phase 0 |

---

## 10. Reference Materials

| Item | Location |
|------|----------|
| First-pass diagnostic | `Team Inbox/Tri-County Tire/2026-05-24 - Ledger to Jimmie - First-Pass Diagnostic.md` |
| This master plan | `Team Inbox/Tri-County Tire/2026-05-24 - Ledger - Cleanup Map - Master Plan.md` |
| Full COA (216 accounts, 116KB JSON) | `tool-results/mcp-j2-qbo-list_accounts-1779626887487.txt` |
| Monthly P&L Jan-Apr 2026 | `tool-results/toolu_015FSsK64vLjHBNpniLfu2oL.json` |
| Full vendor master (187KB JSON) | `tool-results/mcp-j2-qbo-list_vendors-1779627514861.txt` |
| 3-month JE list (282KB, 16K lines) | `tool-results/mcp-j2-qbo-list_transactions-1779627467065.txt` |
| OBE GL detail (15MB, 530K lines) | `tool-results/mcp-j2-qbo-get_report-1779627475255.txt` |
| Task tracking | TaskCreate tasks #1-11; live in current session, can be re-listed via TaskList |
| QBO realm details | Slug `tri-county`, Realm `9341455601828551`, Tier non-chairman / no ceiling |

---

**Status as of 2026-05-24:** Phase 0 in progress. Awaiting Jimmie's decisions on §8 items before dispatching client communication and team handoffs.