Opening Balance Equity and Retained Earnings

OBE should have been cleared to partner equity with a journal entry

debit OBE for the full amount
credit partner one equity for his share
credit partner two equity for his share

RE does not clear to OBE at all

RE is last years net profit, and you clear that to partner equity too

debit RE for the full amount
credit partner one equity for his share
credit partner two equity for his share

As to why RE has a zero balance, that is hard to say from here. I would first look at the detail of each partner equity account to see if the full amount (last years net profit)  posted to one of them instead of RE, if so get back to me and I can explain why and how to fix that intuit blunder.

Thanks for your reply

So to clarify, OBE does not get posted each year...only the first time upon setup - unless a brand new company of course. From then on out, Equity goes to retained earnings which transfers to partner's equity at the end of the year...that correct?

Hello, @haskenazi1.

It's nice to see you again in the Community. Allow me to chime in for a moment and share some additional information about Retained Earnings in QuickBooks Online (QBO).

Yes! That is correct. To transfer retained earnings to partner's equity, you can follow the sample entry provided by @Rustler above.

Just in case, can also check out these article for future reference:

• FAQ: How to use year-end reports.
• How to view Retained Earnings account details.

That should answer your question. Please post again in the Community or leave a comment on this thread if you have any follow-up concerns. Take care and have a wonderful rest of the day!

I am having almost the same trouble understanding OBE, but the transaction that QBO have allocated in there are the first bank account with a 66k balance, a long term liability of 100k one last transaction of 30k I manually entered as fixed assed that was purchased when the business started.

What would be the appropriate JE to adjust this 3 transactions and zero out OBE and make OBQ inactive for good?

Thanks in advance!

We don't need to make an adjustment, Jessy1991--.

When we deactivate the accounts in your Chart of Accounts, the system will automatically make an adjustment. 

Let me guide you on how we can deactivate your bank account, liability account, and fixed asset account.

Let me guide you on how we can do it:

1. From the Accounting tab, select Chart of Accounts.
2. Find the accounts and then click the drop-down arrow under the ACTION column.
3. Select Yes.

I've also added these references that can guide you when organizing your accounts:

• Organize your accounts into parent accounts and subaccounts
• Use account numbers in your chart of accounts

Feel free to mention my name if you need help. I've got your back!

I wonder how setup the beginning balance for RE - QBO does not allow it.

Thank you for joining this thread, Eugene.

Let me share some insights about setting up a beginning balance for the Retained Earnings (RE) account. 

The QuickBooks Retained Earnings account is a special type of account that saves the prior years’ profit or loss automatically when a balance sheet is created. That being said, you're unable to manually create a beginning balance since this account was automatically created by QuickBooks.

Depending on the closing date you provide for your fiscal year, QuickBooks also automatically transfers the balance from your business' other accounts to Retained Earnings on that date.

You can browse this article for additional information and what reports you to need for this account: View details of the Retained Earnings account.

Stay in touch with me by commenting below if you have follow-up questions about setting up a beginning balance for RE. I'm always around to provide the information that you need.

Hi Mary,

If it is so, how can I have the RE balance when there are no previous periods in QBO (I am transferring data from the different system)? 

Thanks

Thank you for getting back to us, @Eugene Batalov. Let me add some information about Retained Earnings account.

When you close the books, the Retained Earnings account will appear.

You can reconcile the previous period and close your books. You may also follow these steps below in closing books.

First, you need to review your account. Here's how:

1. As a primary or company admin, log in to QuickBooks Online.
2. Check your accounts to make sure everything is in order.
3. Input any outstanding invoices, expenses, and payments.
4. Up to the date of your closing, reconcile your accounts.
5. Examine your inventory quantities.

Then, close your books following the steps below:

1. Select Accounts and Settings from the drop-down menu under Settings.
2. Navigate to the Advanced tab.
3. In the Accounting section, select Edit.
4. Check the box that says "Close the books."
5. Specify a deadline. Set a reasonable deadline for yourself. Before this date, you need to make changes to any transactions. After then, your new bookkeeping work will begin.
6. If you want to demand a password before editing your closed books, select the Allow changes after viewing a warning and entering a password option from the drop-down box.
7. Click Save and then Done.

To view your Retained Earnings in the Balance Sheet:

1. Select Reports.
2. Locate and select the Balance Sheet to open it.
3. In the report, locate the Retained Earnings item to see your company's reported net income.

Refer to this article for more information on viewing Retained Earnings account details: How to view Retained Earnings account details.

You can also browse this article as your year-end guide: A year-end guide for QuickBooks Online.

Reach out to me if you need anything else about Retained Earnings account in QuickBooks Online.

That is great but I do not need to close books! I am trying to transfer data from another program and setup the beginning balances including RE one. QBO does not allow me to do it. I should probably use the Accumulated adjustment in Equity instead...