Question

John Ralls jralls at ceridwen.us
Tue Mar 7 13:46:08 EST 2017


> On Mar 7, 2017, at 9:15 AM, D Wt via gnucash-user <gnucash-user at gnucash.org> wrote:
> 
> Hi. Am starting to use gnucash to manage the books of a two-member LLC, which is a pass-through entity. My only question regards retained losses. I believe, though I might be wrong, that normally in double-entry acct that retained earnings/losses is an account which can be credited/debited. That does not seem to be the case with gnucash though, or am I over looking something? 
> 
> The balance sheet shows retained losses as a calculation, but I can't figure out how to distribute these to the two members. 

The balance sheet report does indeed calculate a retained earnings amount as the net of Income and Expense accounts; otherwise it wouldn't be able to balance unless you'd just closed them to a real Equity account that would normally be called Retained Earnings. If the books are freshly closed then the calculated retained earnings will be 0 and the line won't appear in the report; otherwise you'll get two "Retained Earnings" lines so you might want to use a different name for the account so that you can easily tell the two apart on the report.

Distributions to the partners would normally be charged to the retained earnings account.

 You should have a corresponding Equity account called something like Paid-in Capital to account for money contributed by the partners; you probably want a subaccount for each partner so that you can track ownership share. The ratios of the amounts in those subaccounts would normally go to the tax calculation of each partner's share of the income and deductible expenses as well as any distribution of retained earnings to the partners.

Regards,
John Ralls



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