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Retained Earnings

Chip RoyceChip Royce Member Posts: 3

Can someone help me understand how Wave captures each year's retained earnings and how to properly make a distribution in a subsequent time period against retained earnings?

Thank you!

in Accounting Technical Support

Comments

  • Felix OlivarFelix Olivar Member Posts: 4

    Hi Chip. Happy to provide some insight based on my experience. First thing to note is that you don't close a fiscal year in Wave. You can edit previous years' data whenever you need to. All that happens at year-end is that current year earnings get zeroed out and added to previous year earnings.

    At the start of anew fiscal year, you'll see your new previous year earnings balance, income and expense account balances, and your bank account balances. What Wave doesn't do is put those amounts under a common account ,such as retained earnings, that you can post transactions to.

    Instead of creating a journal transaction using a retained earnings account, you might record an income transaction on, say, December 31, which will then automatically feed into the previous year earnings.

  • Chip RoyceChip Royce Member Posts: 3

    Thanks Felix for your offer of assistance!

    I've retained earnings for more than a year, so would prefer to have journal transactions to track this.

    Knowing that Wave isn't tracking this already is helpful

    Trying to figure out the journal entry. I know that a credit goes to the retained earnings account, not sure what account is debited since net income isn't an account

  • CharlotteCharlotte Member Posts: 671 admin

    Hi Chip! Could you explain the JE you are creating? Felix references creating an income transaction in lieu of a JE, because you do not need to close out a year in Wave.

  • Pearlrush ServicesPearlrush Services Member Posts: 8

    Anyone can advise on

    1) How to account for corporate tax and come out with Net profit after Taxation in the year on P&L on wave?

    2) How to account for if previous year earnings use for distribution among partners? (previous yr earnings is wave system ac and we cant Journallise it.

  • Mohamed Imran Buhary Seyed MohamedMohamed Imran Buhary Seyed Mohamed Member Posts: 25 ✭✭

    @Chip Royce said:
    Thanks Felix for your offer of assistance!

    I've retained earnings for more than a year, so would prefer to have journal transactions to track this.

    Knowing that Wave isn't tracking this already is helpful

    Trying to figure out the journal entry. I know that a credit goes to the retained earnings account, not sure what account is debited since net income isn't an account

    I advise you to post the Profit Distribution entry in Each year (best is on your last day of the Fiscal Year) as follows:
    Debit - Profit / Earnings Distribution Account (you need to Create this account under "Equity and Retained Earnings Category)
    Credit - Partners' Current Account

    And if the Payment also can be posted the same day or later:
    Debit - Partners' Current Account
    Credit - Cash on Hand / Bank Account

  • HensonHenson Member Posts: 3

    How to get the balance or "Net Income" to show up in the next year's income line? I'm using Waveapps for budgeting mainly, not tax purposes.

    Thank you,
    -Not an accountant

  • KristenVKristenV Member Posts: 121 admin

    Hi @Henson , at this time, Wave does not offer a feature which reports your previous year's earnings in your current year's income. At year-end, the earnings from that year are zeroed and then added to all your previous years earnings. Are you able to provide a bit more detail as to what you are looking to achieve within Wave?

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