Recording Retained Earnings
in the Journal

by Azie

accounting studentQ: How do you record retained earnings in the journal?

Earnings means profits and retained earnings is all the net profits one accumulated. Also known as accumulated profit.

Anyway, I think what you are referring to is the transfer of net profit at the end of the year to retained earnings. If so, these are the journal entries...

If you made a profit for the year, the profit and loss account would have a credit balance. So you:

Dr Profit and loss account
Cr Retained earnings

If, however, the business made a loss for the year, the profit and loss account would have a debit balance. So you do the opposite:

Dr Retained earnings
Cr Profit and loss account

Notice how the retained earnings gets the balance on the same side as what was for the profit and loss account? If there was a credit balance in profit and loss (profit), then there ends up being a credit balance in retained earnings.

Hope that makes sense! Good luck!


Comments for Recording Retained Earnings
in the Journal

Click here to add your own comments

Retained Earnings in Journal
by: William Jack

The process of writing retained earnings in the journal is that you may know how much you have gained the profit and how much you gained the loss.

Thank you
by: Editor

Thank you very much

by: Anonymous


Click here to add your own comments

Return to Ask a Question About This Lesson!.

Enjoying this Website?
Help Support it with a Donation


Advertise on

privacy policy

Related pages

accruals definition accountingschedule of accounts payable exampleledger accounts definitionwhat is the meaning of ledger balancebad debts journal entriespreparing financial statements from trial balanceinvestment synonymstatement of cash flows direct vs indirectis an income statement the same as a p&lfifo inventory examplesundry debtors meanstypes of accounts in accountancysynonym of sharingbudgeted income statement formatjournal for accountingsundry creditors definitionpro forma cash flow statement templatepetty cash receipt definitionaccounts and ledgersaccounting term for balancing booksbook keeping testexamples of double entry bookkeepingjournal entry for payment by chequecompute vataccruing expensesprofit and loss statement sample excelsample questions on bank reconciliation statementmanagerial accounting formuladifference between accrued expenses and outstanding expensesaccounting hall of fameaccrual examplescash flow flowchartaccount receivable definedepreciation vs expensewhat is accounting receivabledouble entry for debit notehow to write accounts in ledgercollege textbooks cheapmerchandise inventory is classified on the balance sheet as aadvantages and disadvantages of fifothe fifo methodmeaning of ledger in accountingcash flow statement solved problemsfurniture and fittings accountingthe accounting equation explainedrestaurant balance sheet templatevat formularadvantage of lifolink between income statement and balance sheetjournal entry for machinery purchasecash inflow formulaperpetual method of inventorywhat is the meaning of accruals in accountingjournal entry accumulated depreciationfifo periodicaccruals journal entrycontoh account payablefinancial accounting equationreceivable control account formatpaid office rent journal entrydouble entry for accrualnet cash inflowadvantages and disadvantages of fifo and lifocashflow sampledefine accounts recievablemeaning of arrears in hindiwrite off bad debts meaninghow to prepare a cash budget exampletally ownerformula to find cost of goods soldrollforward accountingwhat is meant by creditoraccrued expenses meaningcalculate vat from totalhow to calculate retained profitcheap college textbook rentalshow to calculate a mark up