I’ve been using QF since 2014. At the end of each company year I close off the year using the “Year End Process” feature. This generates journal entries that includes (3101) “Retained Profit & Undistributed Reserves”. This all makes sense to me as far as my basic grasp of these matters allow.
What I’m having a problem with is the amount of Total Distributable Profit that’s shown when I check the report for “Tax Summary”. The Total Distributable Profit has an entry for “Retained Earnings” that shows the sum of the end of year journal entries for (3101) “Retained Profit & Undistributed Reserves”. This is obviously not the amount that’s available as it should be carried over from one year to the next and not be an amount that can be added up individually for each year.
Here’s an example.
Year 1
End of year gives a retained profit of £10,000 which is shown as a credit in the Year End Closing Journal against 3103.
Year 2
End of year gives a retained profit of £5,000 which is shown as a credit in the Year End Closing Journal against 3103.
Year 3
End of year gives a retained profit of £10,000 which is shown as a credit in the Year End Closing Journal against 3103.
Looking at the report during Year 4 it shows retained earnings of £25,000, which isn’t the case since this amount is not in the bank.
There is a tooltip agains the “Retained Earnings” entry in the report that states … “Retained earnings from previous accounting periods (nominal ledger 3101). To obtain an accurate balance here please ensure any previous accounting periods have been correctly closed with income, expenditure and previously issued dividends journalled to retained earnings”. I thought the Year End Process took care of this?
Can someone explain to me what I need to do in order to sort this out?
Thanks, Keith