I don't understand how to transfer earnings to capitals

1

Here is a simplified version of my problem: I’m not good at accounting, so mostly the problem is me

I created one capital account (100$ Paid in advance) now in summary is (capital -100) (retained earning 100)
i have 500 income, I edit (show balances) starting date, now (capital -100) (retained earning 600)

My understanding is that since i started with 100$ and have 500$ income so my final capital would be 600$

When i use journal entry to transfer retained earning to capital it doesn’t work like how i imagined it:

zeroing earnings: earnings debit 600, capital credit 600 would zero the earning but show 500 for capital in summary, and worse shows -500 in capital accounts tab

If I do the opposite: capital debit 600, earnings credit 600 now capital account shows 600 that i want, but retained earnings is a huge number 1,100

what is the correct way? and what should happen? I expect earning to zero out and capital increase by 500

Thanks

2

The entry for this would be receipt to bank account $100(debit), Capital account $100 (credit)
Resulting in Bank Account $100
Capital account $100

To transfer earnings to Capital account Journal debit Retained Earnings $500, credit Capital account $500
Resulting in Capital account $600
Retained Earnings $0.00

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3

Thanks, just one more confirmation to make sure i got everything

I create capital account with balance zero then add to it using cash/bank
negative amount in the capital accounts is the correct sign? in the summary it’s positive

Thank you very much

4

Contributions to equity accounts are credits (-)
Drawings from equity accounts are debits (+)

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5

Yes, because the business in reality is obligated by $100 to the investor. So at one point the investor expect to draw the $100 from the business, i.e. the business will issue a payment to the investor.

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