worksheet with beginning retained earnings and a loss

ILLUSTRATION OF WORKSHEET WITH A LOSS AND BEGINNING RETAINED EARNINGS

In this illustration, there is a net loss for the year. Notice that it is handled similar to a profit, but its position in the debit/credit columns is flip-flopped. Also, study the worksheet and notice that retained earnings decreased from $3,600 at the beginning of the year to $1,900 at the end of the year -- this $1,700 reduction results from the $1,000 net loss and $700 in dividends.