Retained Earnings in MaxxTraxx

Retained Earnings in MaxxTraxx

Overview

In MaxxTraxx, retained earnings cannot be posted to directly. The system automatically calculates retained earnings using the following formula:

Income – Cost of Goods – Expenses

Because of this structure, any adjustments to retained earnings must be made indirectly through other General Ledger (GL) accounts.

Year-End Adjustments

There are times when your CPA or accountant may request year-end entries that impact retained earnings. Common examples include:

  • Depreciation
  • Clearing owner draws
  • Other closing adjustments

To accommodate these entries in MaxxTraxx, you must post them to either:

  • A Cost of Goods account, or
  • An Expense account

Example: Depreciation Entry

Scenario: Recording depreciation for office equipment.

  • Date: 12/31/XX (use the last day of the year being adjusted)
  • Credit: Account #16310 – Office Equipment Depreciation
  • Debit: Account #62410 – Depreciation, Office Equipment (Expense)

Result:
Debiting the expense account increases expenses, which in turn reduces retained earnings.

Owner Draw Adjustments

For owner draw or equity-related adjustments:

  • Your accountant should determine which accounts to use.
  • Entries should still follow the same principle:
    • Post to Cost of Goods or Expense accounts
    • Ensure the correct year-end date is used

Important Considerations

  • Timing is critical:
    Always use the correct year-end date (e.g., 12/31/XX) to ensure the adjustment affects the intended retained earnings period.
  • Avoid using Sales accounts:
    Do not post adjustments to sales accounts unless specifically directed by your accountant.
    • This can alter General Ledger sales totals
    • It may create discrepancies with reported sales (e.g., sales tax filings)
    • It does not change actual tax collected, only reported totals

Alternative Option: Retained Earnings Clearing Account

If you prefer not to impact your existing Sales, Cost of Goods, or Expense accounts:

  1. Create a “Retained Earnings Clearing” account
  2. Assign it as a Cost of Goods or Expense account (per your accountant’s guidance)
  3. Use this account to offset your journal entries

Benefit:

  • Keeps your primary GL accounts unchanged
  • Consolidates adjustments into a single account
  • Maintains clean year-end reporting 

Key Takeaways

  • Retained earnings in MaxxTraxx are system-calculated, not directly editable
  • Adjustments must be made through Cost of Goods or Expense accounts
  • Year-end dating is essential for accuracy
  • Always follow guidance from your CPA or accountant
  • Consider using a clearing account for cleaner reporting

    • Related Articles

    • MaxxTraxx Integrations

      MaxxTraxx Integrates with several online vendors. The following are some of the vendor that we know integrate with us: Labor Guides AllData Mitchell Mitchell Heavy Duty Part Vendors 1-800 Radiator (Wrenchead Nexpart) Advanced Auto Parts (Wrenchead ...

    • MaxxTraxx Backup Solutions

      Workstations can be backup destinations. Make sure you take advantage of our additional workstations-as-backup-locations option. All workstations including the server should be logged out of MaxxTraxx each night to enable MaxxTraxx message, backup ...

    • Backing up MaxxTraxx data

      Having a computer failure can cause tremendous problems for a business. If your local-based MaxxTraxx server fails, or a disaster strikes, it could wipe out your company's data and records. Please note this does not pertain to MaxxTraxx Anywhere ...

    • Important: MaxxTraxx System Update Available

      To all MaxxTraxx users, We have started rolling out a system update that includes new features and important modifications. Please install this update at your earliest convenience. Follow the on-screen instructions carefully, and be sure to reboot ...

    • MaxxTraxx Version 9 Introduction Webinar

      MaxxTraxx Version 9 Introduction Webinar Conducted Wednesday, April 26, 2023 @ 12pm PST Below is a recording of one of the MaxxTraxx V9 Introduction webinars for those of you who were unable to attend or who want to review. Very informal but covers ...