Retained earnings represent the portion of an enterprise's income that is not used to pay taxes and distribute dividends to members and shareholders. It is reinvested in the assets of the company. There are certain rules for reflecting retained earnings in the accounting of an enterprise.
Instructions
Step 1
Write off the amount of net profit received at the end of the reporting year by the final turnovers in December by opening a loan on account 84 "Retained earnings" with correspondence in account 99 "Profit and loss". In the event of a net loss, the write-off occurs on the debit of account 84 "Uncovered loss" and the credit of account 99.
Step 2
Reflect the direction of part of the profit in the reporting year to pay income to the participants of the enterprise based on the results of the annual financial statements. In this case, it is necessary to open a debit on account 84 and a credit on account 75 "Settlements with founders" and account 70 "Settlements with staff on remuneration". A similar entry is made also when interim income is paid.
Step 3
Analyze the balance sheet for the reporting year. If it is necessary to equate the amount of the authorized capital with the amount of net assets, then a loan is opened on account 84 "Retained earnings" with correspondence to account 80 "Authorized capital". If it is necessary to pay off the loss of funds of reserve or additional capital, then the credit of account 84 is written off on the debit of account 82 "Reserve capital" or account 83 "Additional capital".
Step 4
If the losses are covered by earmarked contributions, open a credit account 84 and a debit account 75 "Settlements with founders." You can also cover the company's losses by writing off retained earnings of previous years by opening a debit on account 84 "Retained earnings of previous years" with correspondence on account 84 "Uncovered loss of the reporting year."
Step 5
Organize accounting for account 84 "Retained earnings" for retained earnings so as to reflect complete information about the direction of use of funds. Divide the funds of retained earnings used as financial support for production development and the purchase of new property in the enterprise. Enter records of transactions on account 84 only at the end of December of the reporting year. Do not single out subaccounts in the chart of accounts.
