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February 17, 2026
Question

Journal entry for retained earnings and owner distribution

  • February 17, 2026
  • 1 reply
  • 9 views

Hello!

 

I've been booking draws by two C corp partners under their respective equity distribution accounts. They did not contribute, only withdrew.

 

Need to know how to make a journal entry to close out the year in relation to retained earnings.

 

Would it be DEBIT Retained Earnings, CREDIT Owner Distributions (main GL, not each partner's GL) for the total amount they withdrew in 2025?

And it would need to be dated 12/31/2025, is that correct?

 

Thank you!

1 reply

Rainflurry
Level 11
February 17, 2026

@M4MU 

 

The AJE should be dated 1-1-26, not 12-31-25.  You want the year-end 2025 balance sheet to reflect the total distributions taken in 2025.  If you date it 12-31, then it will appear at year-end as if the shareholders took no distributions in 2025.

 

Also, if each shareholder has their own distribution account in the chart of accounts, then close each one to RE separately.