Recording Retained Earnings
in the Journal

by Azie

accounting studentQ: How do you record retained earnings in the journal?

Earnings means profits and retained earnings is all the net profits one accumulated. Also known as accumulated profit.

Anyway, I think what you are referring to is the transfer of net profit at the end of the year to retained earnings. If so, these are the journal entries...

If you made a profit for the year, the profit and loss account would have a credit balance. So you:

Dr Profit and loss account
Cr Retained earnings

If, however, the business made a loss for the year, the profit and loss account would have a debit balance. So you do the opposite:

Dr Retained earnings
Cr Profit and loss account

Notice how the retained earnings gets the balance on the same side as what was for the profit and loss account? If there was a credit balance in profit and loss (profit), then there ends up being a credit balance in retained earnings.

Hope that makes sense! Good luck!

Michael Celender

Comments for Recording Retained Earnings
in the Journal

Click here to add your own comments

Retained Earnings in Journal
by: William Jack

The process of writing retained earnings in the journal is that you may know how much you have gained the profit and how much you gained the loss.

Thank you
by: Editor

Thank you very much

by: Anonymous


Click here to add your own comments

Return to Ask a Question About This Lesson!.

Enjoying this Website?
Help Support it with a Donation


Advertise on

Search this website:

All the lessons on this site and much, much more...

Accounting Basics: Complete Guide

Available Now On

Get Your Degree!

Find schools and get information on the program that’s right for you.

Powered by

Subscribe to
The Student Accountant newsletter

Enter Your E-mail Address
Enter Your First Name (optional)

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you The Student Accountant.