Retained Profit

Black_Ninja

Hi all,

Just doing up a rough version of a Statement of Financial Position to send to my accountant for the year 2017 to check over.

Basically this is my 2nd year as a sole trader.

In year 1 (2016) my net profit was 6932.78 so this transferred from my Statement of Income over to my Statement of Financial Position as my retained profit. This along with Drawings of 561.04 left my total equity at 6731.74.

So for year 2 (2017) my net profit is 11278.48, when I transfer this over to my Statement of Financial Position do I add it to last years figure giving me retained profit of 18211.26 or do I disregard last years profit and leave it at 11278.48?

My accountant isn't back in the office until Jan 8th and I'd like to have something to go to him with, hence why I'm trying to get it done over the xmas hols while I have some spare time.

shuyin1

Black_Ninja wrote: »

Hi all,

Just doing up a rough version of a Statement of Financial Position to send to my accountant for the year 2017 to check over.

Basically this is my 2nd year as a sole trader.

In year 1 (2016) my net profit was 6932.78 so this transferred from my Statement of Income over to my Statement of Financial Position as my retained profit. This along with Drawings of 561.04 left my total equity at 6731.74.

So for year 2 (2017) my net profit is 11278.48, when I transfer this over to my Statement of Financial Position do I add it to last years figure giving me retained profit of 18211.26 or do I disregard last years profit and leave it at 11278.48?

My accountant isn't back in the office until Jan 8th and I'd like to have something to go to him with, hence why I'm trying to get it done over the xmas hols while I have some spare time.

Retained profit= cumulative profits or loss from prior years plus this years results.

Your retained profit should be 6,932+11,278.

Black_Ninja

Thanks Shuyin1

exaisle

shuyin1 wrote: »

Retained profit= cumulative profits or loss from prior years plus this years results.

Your retained profit should be 6,932+11,278.

This assumes that you had no drawings or capital introduced in 2017.

Black_Ninja

exaisle wrote: »

This assumes that you had no drawings or capital introduced in 2017.

Lets say I had drawings of 7000 in 2017, I would then take that from my retained profit of 6,932+11,278 (2016 & 2017 net profits) leaving total equity at 18211.26 - 7000 = 11211.26?

Would that be correct?

shuyin1

Black_Ninja wrote: »

Lets say I had drawings of 7000 in 2017, I would then take that from my retained profit of 6,932+11,278 (2016 & 2017 net profits) leaving total equity at 18211.26 - 7000 = 11211.26?

Would that be correct?

Equity is split into multiple line items, with the limited details and the original question asked - retained earnings should be 18211 (@2017). You also need to carry forward the drawings from 2016, and account for 2017's drawings (7561)and other equity transactions if any(2016: 360, 2017:??).

With the limited info - your total equity balance should be 18211+360-7561=11,010.

Assets less liabilities should therefore also =11,010.

Black_Ninja

Thanks again. Makes sense now .