Let me try to help:
"First
year, I didn't have the retained earnings."
You had Equity. RE is simply a clarity or slice-and-dice of one specific type of Equity. You run the P&L and the Bal Sheet on comparable dates, and the Net Income from the bottom of the P&L is your Equity, seen as Retained Earnings on the first date of the next fiscal year.
Please see my attached image.
"I transferred distribution
directly to my bank account on a quarterly basis."
Banking menu > Write Check, and post as distribution. You removed Equity, so that runs negative.
"During year end,
quickbooks, did the entry of a net profit to retained earnings. The net
profit came out was after the shareholder distribution."
No, that's Wrong. You are not an Expense and your distribution is taking from Net Profit, whether available from prior years or the current year. Profit is what made money available to you.
You might need to fix your entries.
"Technically,
retained earnings account was created at the year end."
The value is the carry over that isn't already taken by a shareholder. You would have already paid taxes on all of it, as a pass-through entity. That's why it is called Retained.
"The net profit of
the 2018 came out after the shareholder distribution."
No, that's Wrong.
"If I debit
retained earnings then would it reduce the retained earnings?"
Your total Equity is not going to change. You Debit RE and Credit Shareholder Distribution for Jan 1 to Refill Shareholder Distribution to be $0 for the new fiscal year.
"I think,
it will also double count the shareholder distribution. first I
quarterly reduced the bank and now reducing the retained earnings."
You took money, so Bank goes down and Equity goes down. You rebalance Equity for Jan 1. Nothing Changes.
You might need to fix your initial entries for those transfers.
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