why all sales and purchases are adding in retained earning
because it is part of Profit and Loss Accounts. and this is the system structure as I understood. if you need to generate monthly Profit and Loss Account you can extract from reports
This is not true. Retained earnings is a balance sheet account in the Equity group.
Because Manager is a double-entry accounting system. Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to investors. This amount is adjusted whenever there is an entry to the accounting records that impacts a revenue or expense account.
it is agreed that Retained Earning is balance sheet item. what I meant is Sales and purchses is part of the Profit and loss account and the net profit or loss will be closed in Retained Earning once the year or month close. this is how Manager strcure built as I understood. not like other software there will be Monthly profit account where it will showes in the balance sheet under Owner’s equity and will be closed in retained earning on monthly basis until end of the year.
Manager does not, in general, make use of closing entries. See this Guide: Manager Cloud. Balances in Retained earnings may be transferred out via journal entry, such as when a dividend is declared or profits are distributed to capital account owners. But there are no summary income accounts and such.
Since you also mention Owner’s equity, you may be speaking of a business that is a sole proprietorship. In that case, Retained earnings is the same as owner’s equity. That is, the owner owns all the Retained earnings balance. If this is the case, see this Guide: Manager Cloud
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Because Manager doesn’t use closing entries, it transfers a reversal duplication of all the P&L transactions via a background process in lieu of that closing entry.
Lets say you have sales made up of 3 transactions totalling 1000 (credit) and expenses made up of 5 transactions totalling 600 (debit) so you have a “sub-total” net profit 400 (surplus credit).
In a closing entry situation to transfer that net profit from the P&L to the BS you need to create a Journal: debit Net Profit 400 and credit Retained Earning 400. Now the P&L would be zero ready for the next period. So you have this:
P&L Transactions
Sales x3 > (1000)
Expenses x5 > 600
Sub total > (400) - non accounting entry
Net profit > 400
BS Transactions
Retained Earnings > (400)
But with Manager that “Journal” is replaced by a background process which is a reversal duplication of the P&L transaction. So you have this
P&L Transactions
Sales x3 > (1000)
Expenses x5 > 600
Sub total > (400) - non accounting entry
Sales x3 > 1000
Expenses x5 > (600)
BS Transactions
(Retained Earnings)
Sales x3 > (1000)
Expenses x5 > 600
Hence “sales and purchases are adding in retained earning”,
Is there a setting that automates this process? I’m a relative novice and can operate the day to day stuff but Retained earnings have stayed the same at the end of each of the last two years. Do I need to do something manually?
It is not clear what you are asking. This topic asked why sales and purchases affect Retained earnings. The answers, basically, were that Retained earnings mostly functions entirely automatically. So, if your Reatined earnings balance has been constant for two years, that is because you have not made or lost money overall during that period.
If you are asking something else, you need to be more specific with your question.
I read that that is how its meant to work but I can’t see how that happens. IT has added some figures at the end of 20/21 year but didn’t do anything at the end of 19/20 year. Was I supposed to do something. I started using it at 1/7/2019.
I have the same issue with Members Funds and Current Years Earnings.
I’m happy to send you a copy of the file if that will help.
If you wish to clear the Retained earnings account you need to do an allocation journal at the end of each year. The first journal will be on your start date 1/7/19 and would be:
Debit: Retained earnings $41,618.60
Credit: Capital Account/s $41,618.60
Then journal your net profit (or loss) as at the year end 30/6/20 and again as at year end 30/6/2021.
Does manager.io offer a paid support option I’m happy to pay for a couple of hours of online support to sort out what I’m doing wrong?
This forum is the only support I believe.
@AJD is correct. There is no paid support option.
To obtain help on the forum, though, you need to be clearer, @JeffLangdon. What are you referring to when you say, “I read that that is how its meant to work…?” How what is meant to work? And what do you mean by “IT has added some figures at the end of 20/21 year…?” Is that IT as in Information Technology? Or is that IT as in you accidentally capitalized the second letter of It? If so, what IT are you referring to? And what figures are you saying were added? No one can guess what you mean. You need to tell us specifically, as we are not inside your mind.
This comment comes out of the blue, without context. No matter what you are alluding to, it cannot be the same issue, because no other account functions in Manager the way Retained earnings does.
You should not be happy to do that, and I don’t want to see your accounting records. You have no idea who I am, except that I am a moderator on this forum (if you realized that). Besides, access to your accounts would not help without knowing what your real questions are.
Please believe I mean no disrespect. But, based on what you said at the outset, you seem not to understand what a Retained earnings account is for in accounting. Manager is a tool, and you have to know what the tool is supposed to accomplish before you can use it. (You can’t pound a nail with a saw.) I suggest spending some time learning the fundamentals of accounting. You might start here: https://www.accountingcoach.com. Once you understand what the account represents, you might understand what you are seeing. If not, then you can ask questions that will produce the answers you need.
One thing that may help in the interim is a brief explanation that Retained earnings is displayed differently from all other accounts in Manager. Because every single transaction affects the balance in some way, an ordinary drill-down on the balance would quickly become mind-numbingly long. So a while back, the display for Retained earnings only was modified to show starting balances, summaries of net profit, and only provide detailed transaction lists for transactions that posted to the account by name. (Distributions of earnings via journal entries do that, as one example.)
No disrespect taken. I’m a novice at bookkeeping - doing it for the small community group I’m involved with. I chose Manager as it is very intuitive to use. I have conquered the P and L side of things I think. I get that at the end of the year there are automatic adjustments made to Retained Earnings. I started on 1/7/19 populating various accounts with starting balances brought forward from an old MYOB system the previous treasurer had been using,
So at the end of the first year, the RE account looked like this.
So there was an initial RE of 41,618, then at the end of 19/20 year the value became 49,970. Understood.
Then at the end of 20/21 the RE looked like this
So it doesn’t seem to have included what happened in 19/20 or it would have started 20/21 with a balance of 49,970. It’s as if the 10/20 txs didn’t register? That’s what makes me think I am doing something wrong.
Can you post copies of your Statement of Changes in Equity reports for 1 July 2019 – 30 June 2020, and 1 July 2020 – 30 June 2021? That may be more helpful in diagnosing than the transaction drill down screens.
In both statements, the total of the opening balance is the same, i.e. 41,618.60.
Total of the RE 30-06-2020 is 49,970.75.
Total of the RE 30-06-2021 is 46,972.54.
So there is a loss in the period 01-07-2020 to 30-06-2021 of 46,972.54 minus 49,970.75 = 2,998.21
2,998.21 should be the total amount in PL for the period 01-07-2020 to 30-06-2021.
Can you verify that?
Why the RE amount is made up of several amounts is not clear to me, perhaps someone else knows.
It should not be. I suspect a cascading effect from improper entries. This may be impossible to unwind remotely given that @JeffLangdon has already acknowledged his limited understanding of accounting.
@JeffLangdon, what version number are you using?
I have one administration where RE consists of 17 lines, except Starting Balance lines.
Another with 33 lines.
Two others with 1 line.
I am very curious what is the reason that the total RE, except Starting Balance, consists of several lines.