Thank you for the information. You explanation begs the question I am chasing. Do we really need to be adding journal entries to make the Retained Earning account reflect actual monies retained by the company. Retained earnings does not reflect distributions making the term "Retained Earning" confusing since it does not necessarily reflect monies actually retained.

Its seems to be more of a profit/loss indicator over the years, which to me is the reason it does not care about distributions. Thoughts?