The sole owner of a S-corp has a profit of $20,000 in 2008. But he did not distribute it to himself as dividend. So the $20,000 was still in the S-corp bank account at the end of 2008. How should it be accounted for on the balance sheet? I am thinking about to put it as additional paid-in-capital. Thoughts?
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Undistributed previously taxed income
is what it is and leave it there. Retained Earnings.... -
AAA Account M2
The $20,000 will be part of the total income for 2008 shown on line 2 of M2.Line 5 is other deductions which are normally depreciation.AAA is a little confusing until you think it through. It is just as it states, Undistributed Taxable income previously taxed. Other adjustments on line 5 are Sec 179, Contributions, non dedutable expenses.Line 8 of the AAA account will not be the same as Retained Earnings.
A trial balance should be prepared before any S Corporation is prepared. I know this is difficult unless you also do the accounting. Good Luck BobComment
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I agree
with Robert BUT in the real world MANY small Scorp balance sheets do NOT balance and it is sometimes a challenge to prepare a balance sheet that actually balances.Comment
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