Company setup: OBE + Retained Earnings

Aidin · ‎April 01, 2020

I'm setting up my books for this year and have my last years balance sheet that i'm using and entering in all the values.

My question is what happens to the Paid In Capital and Shareholder distribution? (I am an S Corp - 1 shareholder). Last year I had a negative year.

End of 2019 values: (example)

Paid In Capital: $2000

Distribution: -$3000

Retained Earnings: -$20000

Do I add a journal entry beginning of this year to zero out OBE and add in Paid In Capital + Distribution to the retained earnings?
Do the Paid In Capital & Distribution get zeroed out as well?
Is the beginning Retained Earnings value now -$21000 for this year?

Thank you for your help.

Kendra H · ‎April 01, 2020

Hi there, @Aidin.

Thanks for posting your question here.

Before going into detail, It's always best to check with your accountant to be sure this option would work for your business setup.

In the meantime, here are several helpful links that I've provided below with additional info on journal entries and more:

If you have any more questions or concerns, please don't hesitate to comment below. Have a safe and productive rest of your week!

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