Let's start from scratch, bring up the entry you made and delete it or void it if it was a check

use write checks, on the expense tab select retained earnings, and enter the amount, save

Open the chart of accounts and double click on the retained earnings account, the last entry should be a negative amount, same amount you entered on the check

if that is true, then everything is fine.  If not what did it show?

s-corps have a requirement to use payroll for working shareholders before any distributions are made.  I am not sure how that would apply if the corp is not making enough revenue to support the added costs of payroll.  You need to consult with a tax accountant to find out what you need to do in this respect