Discussion:S-Corp distribution - accounting entries Help!!

As of 12/31/2006, I had a retained earnings of $2,000. I want to distribute this to myself. The question I have is how to make the accounting entries in quickbooks. I have created a new Equity account called "Distributions"

I tried out two options. But not sure which way is correct. Hence deleted both transactions. Any pointers or help would be appreciated.

Option I - Wrote a check for myself thereby crediting cash and debiting Distributions. In this scenario the software is showing a '-ve' entry of $2000 in the balance sheet. Retained earnings stays same as $2000.

Option II - Did a journal entry by crediting "Retained earnings" and debiting "Distributions". In this scenario the software is showing a +ve entry of $2000 against "Distributions" and retained earnings become 'Zero'. If this is a preferred approach how will the cash account get affected.

Or is there a different way to record these. Thanks in advance.

On 1/1/08 of next year, you credit dist and debit RE for the balance in Distributions.

I keep reading and hearing about K-1 Distribution. K-1 Tax Form only a year end filing?

My spouse is the only employee and is CEO of our S-Corp. I am CFO not being compensated. I know in my spouse's previous S-Corp Partnership the partners recieved a quarterly K-1.

Your Comments are appreciated.

Thank You

I happened to come across this post and wonder what you meant by "Shareholders in an S Corp receive equal distributions from the corp and the profit at year end is split equally".

Shouldn't Corp income (or loss) be split according to percentage of stock ownership? Can you please explain?

Belle's comment is correct. In all my S-Corps, the shareholders are equal, so their splits are equal as well. I just took on a client that is an S Corp with a 99% SH and a 1% SH, splits are based on this percentage.

SCORP = 1120 S --> K1 --> ur 1040

For the share value, booked at PAR, and whatever you put in on top of par per share is APIC.

It wouldn't matter for your share price per year as it is just abitrary of what it might be worth based on EPS. The problem relies on taxation of the income.

SM LLC would have suited what you were doing. Not sure who recommended you to INC then elect SCORP w/o telling you the proper filing requirements.

Also, SM SCORP = 100% not 51%.

APIC = Additional paid in capital.

Authorized: 3000 shares, but 1501 shares went to you can still be 100% owner as the rest are just treasury stock. For tax matters you are the 100% owner. If the 1499 shares are issued to someone else (aka your lawyer), you might have issues there.

Do you still have a copy of your form 2553 somewhere?

Both LLC and SCORP offers some sort of limited liability but that area can get very complex and it depends on various situations. Can't really get in depth on it.

Do you have a book keeper or an accountant? You might need to back track to the begginning of the corp and start from there....

The 1120S income / items will go to a K1 which then flows to your 1040. The SM LLC goes directly to your 1040 SCH C.

Check your form 2553 for ownership allocation for tax purposes and might want to retain a book keeper or accountant. They don't cost that much =)

Do you perform your own surgery, cut your own hair, fill your own cavities? Most people go to a professional for these things. Your money is important too. That's what professionals are for.

Practitioners on this board are really here to help each other out as tax professionals. That's what this board was ORIGINALLY MEANT for. What you're seeking is free advice.

But to continually ramble on with your wanting to do things on your own, the more stubborn you are, the more ridiculous and idiotic you sound.

This is a frightening statement!

My question is. Is Inventory Provisions belong to INCOME STATEMENT or BALANCE SHEET? In what part should be recorded? Can you explain to me where thus Inventory Provisions comes from? and How does it Called INVENTORY PROVISION.

Please answer those questions and let me understand clearly. As i read some some topics and discussions in this Furom, I believed this is the answer of all my question about accounting matters.