Question on LLC member distributions w/o closing books

[Matt Kowske]

Hello all,

I am struggling with accounting for member distributions in GnuCash. I
am using GnuCash for bookkeeping of a small two member LLC that owns a
rental property. As I understand traditional accounting this would work
something like this:

Equity accounts:

Member A Equity
Member A Contributions
Member A Distributions
Member B Equity
Member B Contributions
Member B Distributions
Retained Equity

At the end of each accounting period the Income/Expense accounts are
zero'd to the Retained Equity account. 'Member A Equity' and 'Member B
Equity' are credited from the 'Retained Equity' account according to
their share in the LLC and also zero'd with the
Contributions/Distribution accounts. When a distribution happens there
is a debit to the Distributions account and a corresponding credit to a
checking account that holds the LLC funds.

Now -- I've read in various places that closing of the books is not
necessary in GnuCash. I THINK how this would be done if you take that
route is to not have the 'Retained Equity' account and just let that be
auto-calculated on the balance sheet. Distributions would still occur
against the same account (e.g. 'Member A Distributions'). The problem I
see with this is that your 'Retained Earnings' line on your balance
sheet is no longer accurate. Since it is just 'Income-Expenses' it will
not account for the member distributions that happened. From what I
understand it SHOULD account for this as the definition of retained
earnings is net profit - dividends (which in this case is called a
distribution). 

I am struggling with where the distributions ultimatley come from in the
double entry accounting when you don't close out the income/expenses. I
would like to know how others handle this -- thanks.