Thank you for your help. We currently have a main Owner's Equity account set up for each partner, along with an owner's contribution and owner's Draw sub account under each. However, one thing I have not been doing, is rolling up investment and draws to each main Owner's Equity account, and have not been rolling up RE either. I'm guessing I can still do this by backdating the entries for 1/1/14 and 1/1/15? Guessing I just need to also ensure they match up with the K-1's from each tax year? And when you use the journal entry to roll up RE, I am either debiting or crediting the main Owner's Equity account for each, right? So then the sub accounts for draws and contributions should only show the current year's activity, and each main one will show the combined activity/balance from the start of the business? And, after I would update these entries, I would then be looking at each main Owner's Equity account to see what is available to draw from? Thank you and I apologize if my questions are redundant, as I am an amateur at this.
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I have a partnership, myself and another are the two partners. We posted a loss the first 2 years in business, but now on the 3rd full year, we are currently posting positive net income. I am the only one who has added cash to the business each year for start up funds, so my equity account is different than my partner's. We have a 50/50 split of profits. We are finally to the point where we can draw money to pay ourselves. I know that each of our equity accounts need to show a positive number and need to be available before each of us can take a withdrawal. Am I supposed to be looking at just this fiscal year's owner's equity account balances to determine the availability of funds? Or am I supposed to also be looking at the rolling balance total including the first 2 years of business also? If I include the first 2 years as a combined total with this year, only my equity account is a positive number, my partner's is negative. Thank you in advance for any help, I am a little rusty on equity accounts still.
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