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EQUITY

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EQUITY

 

 

 

How Jewelry Shopkeeper calculates Equity on the Balance Sheet

 

On the Jewelry Shopkeeper balance sheet, the Total Equity is a calculated

balance of Assets minus Liabilities.

 

The Retained Equity is the difference between the Total Equity as calculated

above and any individual equity accounts that you might have posted.

 

Example: If you have Total Assets of $100 and Total Liabilities of $60, the

Total Equity is calculated to be $40

 

Now, if you have created equity accounts (an account number beginning with

3) such as Retained Earnings As of 12/31/2001 for a figure of $17 and you

have a Common Stock Dividends of $5, then you have itemized equity

accounts totalling $22. The Retained Equity is then calculated as Total Equity

minus Itemized Equity = $40 minus $22 = $18

 

If in the above example, you did not have any values in any Itemized Equity

accounts, then the Retained Equity would equal the Total Equity.

 

         Recording Retained Earnings at Year End

 

Note that you should only enter this amount AFTER closing the year

 

In order to show Retained Earnings at year end, you should go to the Chart of

Accounts Maintenance menu [choice 8,5,1] and add a new 300 account (i.e.

320 and call this account Retained Earning as of 12/31/2001 or any

other description that you want.)

 

Jewelry Shopkeeper will ask "Do you want to enter totals for

previous months?". Type Y and type in the amount of retained earnings

and type in the amount of retained earnings at the end of 2001 in the

CURRENT and 1 MONTH AGO fields. If the year was closed out more than 1

month ago (according to the number of times the period has been reset since

the end of the month) type the same amount in the 2 MONTHS AGO, 3

MONTHS AGO entry fields as appropriate.

 

For example, if you store's fiscal year starts in January and you are currently

in April, type the figure in CURRENT MONTH, 1 MONTH AGO, 2 MONTHS

AGO, 3 MONTHS AGO and 4 MONTHS AGO. 4 MONTHS AGO would be the

end of December in this example.

 

You should run a Balance Sheet at this time to verify the figures.