How to Zero Out Retained Earnings in QuickBooks?

Hi user welcome to Currace Did you want to know How to Zero Out Retained Earnings in QuickBooks? then you are at the best place but understanding this you need to clear few basics like what is Quickbooks retained earnings.

Quickbooks retained earnings is that which helps us in knowing the profit and loss in the business at the end of the year. When the financial year begins then QuickBooks automatically carry forward or add the last year income to the current year balance sheet as the retained earning. If the current year’s profit and loss are equal then you can put zero as the retained earnings for the current year in the balance sheet.

There is not any particular method of retained earnings. Retained earnings simply passes the values to business so that at the end of the year we will get so much profit as retained earnings. In quickbooks we directly transfer the retained earnings to the next year balance sheet as a retained earning account.

If you have entered the wrong amount in the income statement then you will have zero out of retained earnings in QuickBooks. This mistake can be updated at the time when you are examining the financial statement. You have to fix it and you have to check your general reports and ledgers also

How to Zero Out Retained Earnings in QuickBooks

Steps to adjust retained earning in QuickBooks

  1. Firstly open your quickbooks
  2. Then click on the edit menu from the menu bar.
  3. Now select preferences and then click on the accounting option.
  4. Now you need to set preferences for the company , you can select date or password.
  5. When you have described the date and passwords then confirm your step by clicking the confirm in the nextbox.

Steps to check expenses if you have wrong quickbooks retained earning

  1. Open your QuickBooks software
  2. Then go to the charts of accounts.
  3. Now you have to see the income summary. If the income summary is not there then click on add expenses account.
  4. In the same manner, you have to add the owner equity account as a retained earning account.
  5. After that, you have to go to the profit and loss account report.
  6. Now you have to filter your profit and loss account with the fiscal period. 
  7. Now go through with all the expenses and revenue accounts.
  8. Now you have to create new journal entries for that you have to go to the new journal entry window. Enter the date as the closing account date.
  9. Again goto the profit and loss account and there you have to select all the revenues and all the debits amount. 
  10. In the last line of the entry, you have to select the income summary account that you have created and debit the total of the all-expense accounts.
  11. At last click on the save button to save the steps and then close it.

Closing opening balance equity account 

  1. Firstly open your quickbooks 
  2. Then click on the profit and loss report.
  3. Now fliter your report with the fiscal period closing date.
  4. Now take note on the opening balance
  5. Again you have to create new journal entries for that you have to goto new journal entry window. Enter the date as the closing account date.
  6. Select the opening balance equity account from the income statement and make the account as a debit amount.
  7. In the last line of the entry select the Income Summary account and credit the total of all the opening balance equity account
  8. At last click on the save button to save the steps and then close it.

Closing income summary 

  1. Firstly you have to create a new journal entry and date it as the last day of the closing date.
  2. Now Select the Income Summary account and debit/credit it by the Net Income amount which is noted from the Profit and Loss Report.  If you have revenue more than expenses then debit it or  if you have less profit from the  expenses then credit it.
  3. Now select the retained earning account and do debit and credit similar to Income summary report.
  4. Then click on the save and close it.

After reading this post you can clearly understand How to Zero Out Retained Earnings in QuickBooks? but due ti any reason if you are still unable to know How to Zero Out Retained Earnings in QuickBooks? and need any additional help or advice then you can hire a Quickbooks certified ProAdvisor.

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