how to record owner drawing from profit

@imm1858 

It is a reduction in partner equity (debit).  You can write a check to each partner and assign their partner distribution or capital equity account to the checks.  That will reduce both the bank balance and the partner's equity.

Thanks. Regarding the answer, so that is going to lower the equity for the partner, for example, in this case, from 15K (original investment) to 10K (minus 5K of profit).  At some point if I continue doing this over the years, the equity balance will be 0 or even negative.  What happens after that point or that is expected?  Or should I have transfer the profit to the Equity account to begin with ?  Just to re-state the situation:  Original investment per partner 15K.  Equity acct still shows original 15K.  Profit this year, 5K.

@imm1858 

Or should I have transfer the profit to the Equity account to begin with ?

Yes, this should be done based on the partnership agreement.  If doing it annually, close retained earnings to each partner's capital account.  If you need to distribute profits quarterly, then that's a different process and a bit more involved.

Thanks for your answer, and as you can imagine your answer prompted another question. So the profit of 5K is in Checking account.  Are you saying I need to transfer that from Checking to Owner's equity account ?  And if so, then my balance in the equity account is going to be 20K.  Then how do I reduce that by 5K when giving the money to the owner ?  You also mention to "close Retained Earnings" but that account shows 0 balance now.  Should it have something ?  All we want to do is "record" the check that it will be given to the owner and keep the books balanced.

@imm1858 

"Are you saying I need to transfer that from Checking to Owner's equity account?"

No.  Every entry in QB is based on double-entry accounting.  Each entry impacts two accounts.  So, when you say "the profit of $5K is in the checking account", that is not entirely correct.  The $5K is also in the equity section of the balance sheet either as net income (if it's during the fiscal year) or in retained earnings (if it's after fiscal year-end).  It's possible that it is under something else in the equity section but, if there really is $5K in profits, it's there, and it flowed over from the P&L of the same date.  If you don't see it, verify that the P&L of the same date as your balance sheet shows $5K in net income.  The bottom line is that if there is $5K in net income, it's in the equity section of the balance sheet and can be moved via a journal entry to each partner's capital account.  From there, when you write the check to the partners, assign their capital account to their check.  That will reduce your bank account and each partner's capital equity account.