Retained Profit & Undistributed Reserves (3101)

[oompedoomp]

Hi. I’m a Sole trader so the Retained Profit & Undistributed Reserves (3101) represents my salary. I post salary to the Proprietors drawings account. How can I clear this rolling figure at year end from QF. I’ve taken it and spent it!

Thanks

[ian_roberts]

There’s a “proprietor drawings” nominal of some sort in the capital and reserves section, you can clear your drawings “bank account” balance into there at year end by creating a transaction on the drawings bank account to bring the balance to zero and tag it using something not on the list.

[Paul_Courtier]

Sole trader can’t have a salary. Everything they earn is already there’s.

What you do have is non business related expenses, which you tag as proprietor drawings

[oompedoomp]

Hi

Thanks for your reply. I’m aware of the status difference but I treat myself separately from the ‘business’ with separate accounts etc. to simplify everything. I use proprietor drawings to pay my ‘salary’ and other personal purchases. It’s just that the proprietor drawings account will forever accumulate unless I can zero it at the end of each year.

Kind regards

Simon

[Paul_Courtier]

Yes drawings account would accumulate, but so does Retained profit. If you look, you’ll see you’d need to create a journal and reverse both the day after year end by the amount drawn.

If you had a year end Retained profit of 5k but you’d drawn 20k your retained profit would show -15k when creating a year end journal (dated day after year end) to clear drawings, it would zero proprietor drawings and bring retained profit back up to 5k.