When an accounting period finishes, the leftover of a company’s net income, after the distributions have been made, can be understood as the retained earnings. In QuickBooks, you can easily find out and manage these earnings. This software helps you calculate the QuickBooks retained earnings. Additionally, using Intuit QuickBooks, you can effortlessly adjust the retained earnings and also close them.
For doing all of these, you will have to be familiar with the procedures to do so. Do you need expert help to know and execute these procedures? The contents of this blog will aid you. Let’s go through them right away!
We will be providing you with complete guidance with respect to the retained earnings in QB. To know what all you will be knowing about, you can read below.
- What Do Retained Earnings Mean in QuickBooks?
What Do Retained Earnings Mean in QuickBooks?
In the QB retained earnings, the distribution of profits occurs as per a person. When it comes to the equity of a shareholder or an owner, these earnings will be the crucial components. Helping you to reinvest the sum for the assets of a company is the key goal of these earnings. QuickBooks retained earnings help in showing the previous year’s profit as well as loss. With the beginning of the new financial year, the net income of the last year automatically gets filled in the present year’s balance. In your balance sheet, in case the total assets of the present year are the same as the liability, the current year’s retained earnings should be zero.
How to View QuickBooks Retained Earnings Account?
For knowing the total income, as well as expenses, of your company, you can access the Retained Earnings account. The information of the previous years can be obtained from this account. For viewing the QB Retained Earnings account, you can open the Balance Sheet from the option of Reports. Or you can go through the 3 steps given as follows.
- Click on “Reports”.
- Look for the “Balance Sheet”. Then choose it.
- Now, search for the “Retained Earnings” and select it.
After performing these 3 steps, you will be able to find the Retained Earnings option. It will help you know the reported net income of your company. In your Retained Earnings account, the amounts can be distributed using the journal entry when the financial year has ended. When this is done, there will be an increase in the column of Debit. And in the column of Credit, you will notice an increase.
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How are Retained Earnings Calculated in QuickBooks?
When an accounting period comes to an end, an organization will choose to calculate the QuickBooks retained earnings. A simple formula is used for calculating these earnings in QuickBooks. Below, we have mentioned this formula for you.
Retained Earnings (RE) = Net Income + Beginning RE – Dividends
Using this formula, organizations will be able to easily calculate and know the amount of the retained earnings.
How to Enter Retained Earnings in QuickBooks?
In case you require guidance to enter the QuickBooks retained earnings, you should select the Create option. Then go to Journal Entry and adjust the date. Now, search for the column named Account and locate its first line. You can make a selection of Retained Earnings. Then enter the Credits column and in its second line, you can put in the amount you would like to access. Add the amount in Debit and then finally press Save. That is all you need to do for entering the retained earnings in Intuit QB.
- When you open “QuickBooks”, you need to find the “Create” icon. Once found, click on it.
- Select the “Journal Entry” option.
- For matching the opening balance, the date you prefer has to be adjusted.
- Go to the column of “Account”. Access the 1st line of the column.
- “Retained Earnings” has to be selected.
- In “Credits”, mention the balance.
- In the 2nd line, for creating the balance, input the amount which you want to access.
- Go to the column of “Debit” and input the amount.
- Click on “Save” and then exit.
How Do I Adjust Retained Earnings in QuickBooks?
Here, we will focus on how to adjust retained earnings in QuickBooks. The option of Edit in the Menu Bar will be useful for adjusting them. You can enter the Preferences via edit. After hitting the Accounting button, pick the Date/Password option. This is accompanied by providing the Closing Date as well as the Password. If you would like to know this procedure in a step-by-step way, then you should scroll below.
- Ensure that “QuickBooks” is running on your system.
- Access the “Menu Bar”. Find “Edit” in it. Then tap on it.
- Click on “Preferences”.
- Press the “Accounting” button.
- Using the “Company” preferences option, choose “Date” or “Password”.
- Provide the “Closing Date”.
- Now, fill in the “Password”.
- Click on “Next” to confirm.
How to Close out Retained Earnings in QuickBooks?
Certain QuickBooks users may be willing to know the steps to close out the retained earnings in this software. You can open Charts of Accounts for doing so, It will provide you with the Income Summary option. Select it and then choose the Expense Account. Ensure that you add the Equity Account of the owner as the Retained Earning Account. Choose the Income Statement/Account Report for Profit and Loss. Filtering the Profit and Loss Account as the fiscal period, you can add a note for the revenue and expense accounts. After accessing the window of New Journal Entry, you can provide the Closing Date.
- Starting “QuickBooks is the first step.
- This is followed by clicking on “Charts of Accounts”.
- Look for the option of “Income Summary”. In case you are unable to find this option, you can select “Expense Account”.
- The “Equity Account” of the owner has to be added as the “Retained Earning Account”.
- Look for the “Income Statement” in the fifth step. In case it is not available, you can find and choose the account report for “Profit and Loss”.
- The “Profit and Loss Account” has to be filtered as the fiscal period.
- For the expense account and revenue account, you can make a note.
- Access the window of “New Journal Entry”. In this window, you can create a new journal entry/entries.
- Input the “Closing Date” in this step.
- Look for the “Profit and Loss Account”.
- Every debit amount and revenue has to be selected.
- In case of the entry’s last line, select the “Income Summary Account” which was recently made by you. Enter the total revenue accounts.
- Tap on “Save”.
- Now, click on “Close”.
Alert: See to it that every number, as well as calculation, is correctly entered by you. Doing so will ensure that the accuracy does not get affected.
After reading the steps displayed above, you would have easily learnt how to close retained earnings in QuickBooks.
In Summation of the Above
It is a good practice to know the retained earnings of your company. For viewing them in QuickBooks, you can view the retained earnings account. Additionally, for calculating, entering, and adjusting them, you can utilize this software. Here, we outlined every procedure you required for calculating, adjusting, and entering the retained earnings in QB. We believe that these procedures excellently guided you.
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