Skip to main content
A
arkvalleyinfo
October 19, 2018
Solved

Should the subaccounts of partners equity accounts be accumulated adjustment "detail type" equity accounts or partner's distribution/contributions equity accounts?

  • October 19, 2018
  • 2 replies
  • 0 views

I am setting up an LLC with 3 partners.  I created 3 partners' equity accounts (capital accounts) with two subaccounts each (equity accounts) one for contributions and one for distributions.  Should the subaccounts be accumulated adjustments or distributions and contributions equity accounts on the "detail type" field? if they should be d and c accounts should they still be subaccounts of the partners' equity account?

    Best answer by Rustler

    @ CCV

    In QB when you create a sub account, the parent account becomes a summing account and you do not post to it, if you do post to it, then on the balance sheet you will the account name-Other with a balance, very strange to look at

    so the equity account structure if you are using sub accounts, should look like

    [name] Equity (do not post to this account it is a summing account)
    >> Equity
    >> Equity Drawing - you record value you take from the business here
    >> Equity Investment - record value you put into the business here

    And as John says at year end after all tax time adjustments are made you move (roll up) the balance using journal entries and clear drawing and investment to equity, as well as the partners portion of retained earnings

    2 replies

    Rustler
    RustlerAnswer
    October 19, 2018

    @ CCV

    In QB when you create a sub account, the parent account becomes a summing account and you do not post to it, if you do post to it, then on the balance sheet you will the account name-Other with a balance, very strange to look at

    so the equity account structure if you are using sub accounts, should look like

    [name] Equity (do not post to this account it is a summing account)
    >> Equity
    >> Equity Drawing - you record value you take from the business here
    >> Equity Investment - record value you put into the business here

    And as John says at year end after all tax time adjustments are made you move (roll up) the balance using journal entries and clear drawing and investment to equity, as well as the partners portion of retained earnings

    john-pero
    john-pero
    October 19, 2018
    Keep them as sub accounts, as such they affect the capital accounts. They are d and c and should be emptied into the parent capital account at same time, year end, when profit or loss is distributed to the capital accounts.
    Terms & ConditionsAccessibility statement