Question on LLC member distributions w/o closing books

[Matt Kowske]

On 02/22/2015 10:32 AM, Wm wrote:
>
> If the distribution is "on paper only" then you use a Liability
> (upside down Asset) account to recognise the amounts the LLC owes but
> hasn't distributed.  Does that solve the bank account problem?
>
> The point is Equity / Capital is balance sheet only so you can't (or
> shouldn't) use Income and Expense accounts for this sort of transaction.

So if I create a liability for the LLC of "Unpaid distributions" I can
credit this account to represent money not yet paid out to members from
net profits. The problem still is, where does the corresponding debit
come from? I can take it from owner's equity but that decreases their
equity in the LLC and that is not what is happening. Conceptually,
equity should increase from retained earnings and then decrease as
profits are paid out.

I think Buddha Buck is hitting the crux of what I'm having trouble with
so I'll continue over there...