What are the steps in QB to allocate last year losses into my 2 partner capital acct and also update retained earnings to zero it out. I'm not sure how to get this done.

There are 2 partners in my LLC.  50% owners each.  We have a capital and draw account set up for each partner. 

At the beginning of each year, my accountant would make a journal entry into each capital account.  This entry would account for the losses from previous year.  So for example on the first of each year there is a journal entry to the capital accounts for the amount declared on each partners k1 current year increase/decrease.

they also added the total net loss into the retained earnings account to zero out each year offsetting the automatic closing entry made by QB.

How do I do this?  I don't know how to make this type of entry into QB and I'm stuck trying to figure this one out by myself.  I do see it is a journal entry but I'm really not sure how to do this for all 3 accounts (2 capital accounts and the retained earnings)

Thank you!


Answer

You run the Balance Sheet Standard for Jan 1 and customize it to include "Previous Period."

You make sure all Year End allowances, etc, are entered.

Now, instead of trying to figure out a complex JE, just double-click each Equity account, such as Your Draw. Make an entry on the bottom line (always where to do the entry) and Date it what matters, such as Jan 1. Tab over to Increase. This account runs negative, so Increase the amount using the amount you see for Dec 31. Tab around and on the second line of this one transaction, for "account" offset, select your Capital Account. Tab around or Record this entry.

Now your Draw = 0 for the first of the new year. Reconcile this account to ending balance of 0 for Jan 1, clearing all the Prior year activity. Don't checkmark 2018 data, except Checkmark the entry you just made that brings it to 0.

As with every reconciliation, you get to a difference of 0, if you did this right. Hit Reconcile Now.

You just made it 0 to start the new year fresh and Proved you did it right.

Using the Register view is the easiest view; you see Increase or Decrease, not worrying about debit-credit.

The Retained Earnings account doesn't have a Register. So, double-click your Capital Account and make an entry here. If RE is negative, then Capital needs to be Decreased, so that the second line of the entry here, for Jan 1, will Decrease Capital and Increase (refill) RE. Do that for each partner.

Look at your report, again. Make sure it is automatically Refreshed.

Please see my attachments.

Was this answer helpful? Yes No
Original
AllStar

No answers have been posted

More Actions

People come to QuickBooks Learn & Support for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach:

Qb community
Looking for advice from other business owners?

Visit our QuickBooks Community site.