Closing Equity into Retained Earnings in QuickBooks Desktop

Did you Close Equity into Retained Earnings for last year?
At the end of each year, QuickBooks closes net income into Retained Earnings - yet Owner Draws or Shareholder Distributions need a Journal Entry to be adjusted.
I created a how-to video to explain how retained earnings and equity accounts work. 😊
Are you ready to close out your Owner's Draws, Owner's Contributions, Shareholder's Distributions, or Shareholder's Contributions for the previous year?
➡️ Profit and Loss Report
Go up to “Reports”
“Company & Financial”
“Profit and Loss Standard”
➡️Profit & Loss
Income - Expenses = Profit
➡️ Balance Sheet Report
Go up to “Reports”
“Company & Financial”
“Balance Sheet Standard”
Net Income will be moved to Retained Earnings (First day of Next Year)
Go up to “Company”
“Make General Journal Entries…”
Assigning numbers to Journal Entries pop up screen
Click “OK”
“Date” (First day of next year)
“Account” under Owner’s Equity
Credit “Amount”
“Memo”
➡️ 2nd Line
“Account” Retained Earnings
Debit “amount”
“Memo”
Click “Save & Close”
➡️ Note:
Owner’s Draw - Credit
Owner’s Contribution - Debit
Retained Earnings should match/total both Debit & Credit side
Tip: If you are behind on your closing entries you can go back and adjust one year at a time.
If you are looking for the Online version of click here: • Closing Equity into Re...
Looking for the training on "How to enter Depreciation into QuickBooks": • How to enter Depreciat...
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I’d love to hear if this inspired an “aha moment” and if you are ready to close your Equity accounts.
Timestamps:
0:00 - Intro
0:31 - how retained earnings work (Profit and Loss)
1:11 - Retained earnings in Balance Sheet
3:25 - Close into Retained Earnings (Journal Entry)
6:50 - Checking Balance Sheet (Retained Earnings)
7:02 - Checking Chart of Accounts (Retained Earnings)
7:23 - Candus Kampfer Final Thoughts
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[@BG3Creatives]

Totally straight forward and helpful. Thank you.

[@CandusKampfer]

Hi,
Thanks for reaching out.
I'm so happy you found our video helpful!
If you’d like to learn more about how to optimize QuickBooks for your business, I recommend
checking out our Confidence with QuickBooks program. To learn more you can attend our Customizing QuickBooks workshop. Save your seat here:
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Have a great day,
Samantha, Team Candus

[@jay-vanz]

Thanks, super helpful!

[@CandusKampfer]

Hi Jeff,
I'm so glad it helped you.
Have an amazing day!
Kindra ~ Team Candus
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[@RyanTinger]

This is a great video, thanks.

[@CandusKampfer]

Hi Ryan,
I'm glad you enjoyed it!
If you're looking for more QuickBooks training, I'd recommend joining us on our next workshop.
You can save your seat here: canduskampfer.com/workshop
Have a great day!
Ireland
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[@Mstroup93]

Very helpful, thank you

[@CandusKampfer]

Hi Maxwell,
Glad it helped you.
Have an amazing day!
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[@chanlychoeurn1037]

Great lesson

[@CandusKampfer]

Thank you Chanly Son. Glad it helped you😊
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Elaine -Team Candus
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[@kmohan24]

Hi Candus, how do I set up a owner's draw account in quickbooks pro desktop. I am a C-Corp. And how do I take out retained earnings to my personal account? Thanks a lot

[@sfpda]

it's great lesson

[@CandusKampfer]

Thank you so much 😊

[@southern2thecore111]

Hi Candus, Thanks so much for this video and the others you put out - they're always informative and much appreciated! My question specific to this one is can I close owner's contributions a few years after the fact? In other words, the business started in 2019 with $1000 of owner's equity and that has never been closed into retained earnings so is it too late or can I do it this year? Thank you again!

[@CandusKampfer]

Yay! Glad know that the videos are helping you 😊
I'll make sure your question is added to Candus' list of future Tips & Tricks ideas.
If you'd like to make sure you get our weekly tips, you can join here: canduskampfer.com/weeklytips
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Elaine
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[@kellydean4232]

Thank you so much for your videos! One question, What is the other account that you use to close Owner's Draw?

[@CandusKampfer]

Hi Kelly,
A journal entry to the drawing account consists of a debit to the drawing account and a credit to the cash account.
Have a great day!
Kindra ~ Team Candus
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[@user-en2kq6tb6l]

This is a very helpful and clear video. Thank you so much! I have one client QB file that only uses one equity account for the one shareholder, so if a contribution is made it simply offsets the draws in that account. It's typically thought of as a draws account since the draws usually exceed the contributions. Once every so often there's a year when the contributions are higher, so the balance at the end of the year is positive in that account. Would you still do an adjustment for just the contributions, in essence increasing the retained earnings balance? (And, is it okay to keep doing distributions and contributions in one GL account?)

[@CandusKampfer]

Thank you so much! We're so glad you found our video helpful 😊
I will add your question to the list Candus uses to create new QuickBooks tips each month. If you haven't already joined our weekly QB Tips & Tricks, click here to join and we'll send you our tips straight to your inbox: canduskampfer.com/weeklytips
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[@gotosuccess847]

Hai how to transfer net income to reserve

[@cherylmccoy660]

Hi Candus! Great Lesson, however please going forward would you state what you are clicking to open rather than just saying "open this"? The video isn't very clear and the printed messages on the video are over the Toolbar/Tabs area. Thanks for offering this video!

[@CandusKampfer]

Cheryl,
Thank you for your feedback. You can turn the captions off, if they are in your way.
Have a wonderful day!
Candus

[@danatavares2038]

I usually don’t know my year end figures until I record all my credit card statements which don’t arrive until the middle of January.

[@CandusKampfer]

Hi Dana,
Yes, this are things you would do after all your transactions are entered and taxes are filed.
If you're looking for more QuickBooks training, I recommend attending our workshop.
Here is the link to register to attend: canduskampfer.com/workshop
Have a great day!
Ireland
Team Candus
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[@paiVT]

At 4:46 I noticed you unchecked the "Adjusting Entries" Box. Is closing out Owner drawing's into retained earnings not an adjusting entry ?

[@CandusKampfer]

Thank you for reaching out 🙂
I'll make sure your question is added to Candus' list of future Tips & Tricks ideas.
If you'd like to make sure you get our weekly tips, you can join here: canduskampfer.com/weeklytips
Have an amazing day!
Elaine
Team Candus
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[@themoderngamer3938]

Hi Candus Kamper I am confused closing retained earning, draws. Would mind if you can help me solve it. If i send you copy of my QB company backup? Coz i can not make them zero same way as you did. Thanks

[@CandusKampfer]

Thank you for watching our videos 😊
The best possible way for you to receive support from Candus is to register for and attend her workshop.
Here is the link to register to attend: canduskampfer.com/workshop
Have a great day!
Kindra ~ Team Candus
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[@marvelouss719]

My Quickbooks Mac Desktop 2022 has two folders for company files: documents and applications. None of my company files are in the Quickbooks applications folder. How can I fix this?

[@CandusKampfer]

Are you having an issue with your QuickBooks? The documents will up receipts or files you upload.
Susan
Team Candus

[@marvelouss719]

My Quickbooks Mac Pro desktop doesn't show the RE or the closing entry after the closing date was entered for 12/31/21. Do you know how to fix this?

[@CandusKampfer]

It should show on the first day of the new year.
Candus

[@MahmoudMohamed-qc2gm]

How can i close the net income or losses into retained earnings ??? Should made automatically but something wrong its stay in net income account in balance sheet

[@CandusKampfer]

Make sure you are looking at the Balance sheet on the first day of the next year?
Candus

[@bluovalgal]

You said : Tip: If you are behind on your closing entries you can go back and adjust one year at a time.
QUESTION: Won't this change your P&L and/or Balance Sheets for previous years? Thanks.

[@CandusKampfer]

It will not change your Profit and Loss if you're closing out equity accounts. It will change up your balance sheet.

[@bluovalgal]

@@CandusKampfer Yes, only closing out equity accounts. Since taxes are already file, might make better sense to close out the equity accounts to 1/1/23. Interesting to think about. Thanks.

[@leprimad]

Retained Earnings is a line item of Equity.... not the other way around.

[@PINKSANDY100]

hi candus love your videos how can i contact you to see if you can help me with my bookkeeping

[@CandusKampfer]

Hi Sandra,
If you would like to learn QuickBooks I'd recommend taking Candus's workshop. Here is the link to join: canduskampfer.com/workshop
Have a great day!
McKenzie
Team Candus
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[@sthot86]

Very helpful, thank you!

[@CandusKampfer]

Glad it helped you.
Have an amazing day!
Ednalyn ~ Team Candus
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