Where to Enter Retained Earnings in UltraTax CS
Leave the retained earnings fields in Screen L-2 blank and let Schedule M-2 drive the figure. That is what makes Schedule L agree with Schedule M-2. Screen Mc handles income reconciliation and retained earnings on an 1120, and Screen Ms is the S corporation M-2. Do not assign tax codes 467 to 470 to the retained earnings fields.
- Balance Sheet folder
- Screen Mc (1120) or Screen Ms (1120-S)
- Retained earnings and M-2
| Trial balance account | UltraTax CS screen and field | Lands on |
|---|---|---|
| Retained earnings, ending | Driven by M-2. Screen L-2 fields stay blank | Schedule L line 24 or 25 |
| Income reconciliation (1120) | Screen Mc, Income Reconciliation and Retained Earnings | Schedules M-1 and M-2 |
| S corporation M-2 | Screen Ms, Balance Sheet folder | Schedule M-2, AAA columns |
| Distributions | Screen Ms, M-2 section | Schedule K line 16d and K-1 box 16 code D |
| Tax codes 467 to 470 | Do not assign them to retained earnings fields | Keeps Schedule L and M-2 in agreement |
| Suppress Schedule M-2 | Screen Ms, Suppress printing of Schedule M-2 | Hides the schedule |
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Try it freeWhere to Enter Retained Earnings in UltraTax CS on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings (the account this page is about) | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Income summary | 74,900.00 | |
| Retained earnings | 74,900.00 |
| Account | Debit | Credit |
|---|---|---|
| Retained earnings | 52,000.00 | |
| Shareholder distributions | 52,000.00 |
The field you are looking for should stay empty
The usual instinct is to find the retained earnings field on the balance sheet and type the number in. In UltraTax that is the way to make Schedule L and Schedule M-2 disagree.
Thomson Reuters guidance is explicit: for Schedule M-2 to agree with Schedule L, the retained earnings fields in Screen L-2 should stay blank, and tax codes 467, 468, 469 and 470 should not be assigned to those fields. The ending figure is then produced by the M-2 roll forward.
Which screen, by entity
1120: Screen Mc, Income Reconciliation and Retained Earnings, in the Balance Sheet folder. It carries both the M-1 reconciliation and the retained earnings roll forward.
1120S: Screen Ms, the S corporation M-2. It also holds a Suppress printing of Schedule M-2 option, which is worth checking when the schedule is missing rather than assuming a threshold problem.
1065: Screen M1M2, because a partnership tracks partner capital rather than retained earnings.
Retained earnings and AAA are different things
On an 1120S, Schedule M-2 tracks the accumulated adjustments account under tax rules while the balance sheet carries book retained earnings. They separate through nondeductible expenses, differences between book and tax depreciation, and any history as a C corporation.
So the two figures not matching is normal. Forcing them together destroys the information that the difference carries, which is often the only visible sign of a nondeductible item that was netted away in the books.
The roll forward as a control
Beginning retained earnings, plus net income, less distributions, plus or minus prior period adjustments. When the balance sheet does not tie, compute what ending retained earnings should be and compare:
- Difference equals the distributions: they were not entered
- Difference equals net income: the year was never closed, or page 1 is incomplete
- Difference equals twice an account: a sign is reversed
- Difference under $10 on a new client: inside the default rounding tolerance
That comparison is faster than reading the balance sheet line by line, and it is the reason to leave the ending figure computed rather than entered.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Schedule L line 25 and Schedule M-2, from Screen Mc |
| Form 1120S | Schedule L line 24 and Schedule M-2, from Screen Ms |
Common questions
Where do I enter retained earnings in UltraTax CS?
Normally nowhere. Leave the retained earnings fields in Screen L-2 blank and let Schedule M-2 drive the figure, which is what keeps Schedule L and Schedule M-2 in agreement. The M-2 itself is Screen Mc on an 1120 and Screen Ms on an 1120-S.
Why does Schedule L not agree with Schedule M-2 in UltraTax?
Usually because the Screen L-2 retained earnings fields were populated, or tax codes 467 to 470 were assigned to them. On an 1120S there is also a legitimate difference: M-2 tracks the accumulated adjustments account under tax rules while Schedule L carries book retained earnings.
What is Screen Mc used for?
Income Reconciliation and Retained Earnings on an 1120, in the Balance Sheet folder. It carries the Schedule M-1 reconciliation and the retained earnings roll forward. The S corporation equivalent for Schedule M-2 is Screen Ms.
Schedule M-2 is missing from my 1120S. Why?
Either the client is under the thresholds, in which case UltraTax does not complete it, or the Suppress printing of Schedule M-2 field on Screen Ms is set. Check the suppression setting before assuming it is the threshold.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 17, 2026.