The sixth step in preparing the worksheet is to subtotal the retained earnings columns (e.g., total debits = $1,000 and total credits = $2,600). Because credits exceed debits to retained earnings accounts, there is a positive ending retained earnings of $1,600. The red circles show how the retained earnings is "balanced out" on the retained earnings columns and "carried forward" to the balance sheet columns (remember, retained earnings increases equity). It is important that the retained earnings columns be completed with debits equal to credits as shown ($2,600 = $2,600)!