Final answer:
To record a loss after tax, an entry is made on the debit side of the retained earnings account, reflecting the decrease in equity due to the loss.When a company incurs a loss after tax, it reduces the Retained Earnings account by debiting it. The loss is recorded on the debit side of the account.
Step-by-step explanation:
When a company experiences a loss after tax, this loss is reflected in the company's financial statements by adjusting the retained earnings. Retained earnings represent the cumulative amount of net income or loss that a company has retained, rather than distributed to its shareholders as dividends. To record the loss after tax in the general ledger, you would make an entry on the debit side of the retained earnings account. This is because retained earnings is an equity account and normally has a credit balance. A loss, which decreases equity, would therefore be recorded on the opposite (debit) side to reflect the reduction in equity.