I'm working on finalizing the 1120S tax return (an extension has been filed and tax payment made prior to 3/15). The situation is my balance sheet (Schedule L and Sch M-2 need to be done but are not balancing.)

First For Sch L...

This business has one owner (100%). He pays himself an annual salary we file payroll taxes, W-2's, etc. but the owner often takes money out of the account to pay for items that are personal. I record these transactions as owner's draw because it's not business-related, such as clothes or downloading apple games/music. Now, I have $68K worth of owner draws for 2014. Where do I record this so my balance sheet balances? It says it's off because it's taking this year's profit after expenses and adding it to last year's retained earnings which is waaaaaay over what I have recorded.

Last year retained earnings were $45,595 + this year's income is $127,551 = $166,817 for this year's retained earnings that the tax program is coming up with. However, my Quick Books balance sheet says $69,360 for retained earnings this year. Does this number include last year's number or should I add it? If I add it I'm still out of balance by $47,862. If I don't add it I'm still off. The owner took $68,001.86 in draw's. Why is there such a big difference? How can I fix this? Where do I find it?

Your help is truly appreciated.

Thanks,

T