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ky2
December 11, 2018
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How Do I convert Owner's Draw at the end of the year for a sole proprietorship.

  • December 11, 2018
  • 1 reply
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This is my first year keeping books in QB. I am trying to understand how to convert Owner's Draw at the end of the year for a sole proprietorship. I am using QB Pro 2014 with Enhanced Payroll. As I understood it, I should make a general Journal entry at the end of the year transferring owners Draw to Owners Equity.  I was starting to do that, when I realized that QB had already made an entry on 12/31/14 debiting Owner's Equity (is that the correct use of "debit"? It made it a positive amount). Owner's Draw is a negative amount, which makes sense. But what doesn't make sense is that the amount in Owner's Equity does not equal the amount in Owner's Draw on 12/31/14. It's $3,000 off. Can anyone help me here?


Best answer by Rustler

12/31 QB made an entry adding net profit to your equity account

to move draw to equity, journal entry

debit equity, credit draw for the full amount in the draw account

Payroll is for employees, the owner of a sole proprietorship is not supposed to be on payroll

1 reply

Rustler
RustlerAnswer
December 11, 2018

12/31 QB made an entry adding net profit to your equity account

to move draw to equity, journal entry

debit equity, credit draw for the full amount in the draw account

Payroll is for employees, the owner of a sole proprietorship is not supposed to be on payroll

    M
    MyGirl
    June 9, 2022

    I just attempted to close out as you had instructed and QB Desktop gives me a warning not to do this as this is the retained earnings account (Equity Account) that QB's loads retained earnings into at the end of each year.

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