Welcome to Community space, @jmaurer1.
The balance sheet's retained earnings section provides insight into a business's current financial status. It's crucial to ensure that the amounts and accounts are accurately recorded. Therefore, I'm here to provide details on how to process shareholder distributions to retained earnings.
Retained earnings is the balance of accumulated profit or loss earned on your Income Statement each year. QuickBooks automatically records this entry, so there's no need for manual entries.
Distributions is a debit account. When paying them out, debit the account and credit your Cash account to maintain their balance.
When you earn a profit, it's ideal for the credit balance in Retained Earnings to grow each year. On the other hand, each time you pay yourself Distributions, the debit balance in the Distributions account increases. Whether you keep your funds in one account or two, the net of the two is your Equity.
In terms of posting Retained Earnings, I highly recommend consulting your accountant. They can determine what's the best approach for this.
You'll want to check out these pages to learn more about this topic:
For the overview of account types in the program, refer to this article: Work with the chart of accounts in QuickBooks Desktop.
I hope this answers your question about posting Shareholder Distributions to Retained Earnings. Let me know if I can help you with any other account-related tasks. Have a great day.
