Introduction
The profit calculated for a financial year needs to be allocated to individuals or carried forward as retained earnings. Any undistributed profit will remain unallocated in Simple Invest.
The loss incurred in a Financial Year needs to be quarantined and can be carried forward to offset future profit where applicable. The loss will also need to be allocated to proper accounts in Simple Invest.
When users select Calculate Profit/Loss from the Period Compliance page, the system will display a warning with an unallocated amount if there is any. This article lists journals applicable to Individuals under different scenarios. Please also check Simple Invest - View Losses.
Note: The profit allocation processes for Trust and Companies are slightly different. Please refer to Distribute Profit for Trust and Calculate Profit/Loss for Companies.
Instructions
| Navigate to Compliance from the Main Toolbar |  |
| Select Period Compliance |  |
Select Calculate Profit/Loss under Period Compliance, the system will display a warning of any unallocated amount.
In this example, there is a profit of $2,000 unallocated.
Select Create Profit/Loss Allocation Journal. Users will be led to the transaction screen to post a journal entry.
In that journal, one side of the entry will default to the 49000 Profit/Loss Allocation Account with the unallocated amount, which is not editable on creation, but can be further updated after posted. The transaction date will be pre-populated as of the end of the financial year, but can be updated where necessary.
The processing of profits for individuals is relatively flexible. Users can either create an equity account in the 58060 - 58099 range similar to a Retained Earnings account or post the profit to the 88000 Sundry Creditors account.
a. Create and post to an Equity Account
Please also refer to Chart of Accounts on how to create a new account.
| Navigate to Accounting from the Main Toolbar |  |
| Select Chart of Accounts |  |
| Select Other under Add Account |  |
Select Normal/Control from the drop-down list for Account Class as needed. Enter a unique Code in the 58060-58099 range, and Name for the account. Click Save once completed.
Post it to the newly created Individual Earning Account on the other side of the entry. The entry will display as such:
Dr: 49000 Profit/Loss Allocation (Default)
Cr: 58060 Individual Earning Allocation (User-created)
Select 
to complete the transaction.
b. Post it to Sundry Creditors account
Post it to the Sundry Creditors Account on the other side of the entry. The entry created will display as such:
Dr: 49000 Profit/Loss Allocation (Default)
Cr: 88000/Sundry Creditors
Select 
to complete the transaction.
Note: depending on the scenario, different journal entries can be created.
In this example, there is a loss of $1,000 to allocate.
Users can select Create Profit/Loss Allocation Journal, where users will be led to the transaction screen to post a journal entry.
In that journal, one side of the entry will default to the 49000 Profit/Loss Allocation Account with the unallocated amount, which is not editable on creation, but can be further updated after posted. The transaction date will be pre-populated as of the end of the financial year, but can be updated where necessary.
The processing of loss for individuals is relatively flexible. Users can create an equity account in the 58060 - 58099 range similar to a Retained Earnings account.
Please also refer to Chart of Accounts on how to create a new account.
| Navigate to Accounting from the Main Toolbar |  |
| Select Chart of Accounts |  |
| Select Other under Add Account |  |
Select Normal/Control from the drop-down list for Account Class as needed. Enter a unique Code in the 58060-58099 range, and Name for the account. Click Save once completed.
Post it to the newly created Individual Earning Account on the other side of the entry. The entry will display as such:
Dr. 58060 Individual Earning Allocation (User-created)
Cr. 49000 Profit/Loss Allocation (Default)
Select 
to complete the transaction.
Note: depending on the scenario, different journal entries can be created.
After journals are posted, users can then go back to the Period Compliance page and select 
. A message will display below.
Users can now proceed to close the financial period by selecting Close Period.
Please note
1. Simple Invest is still in Beta mode and subject to possible changes.
2. BGL does not provide tax advice. Journals other than listed above might suit better.