how does recording an expense of $500 without affecting cash and hitting retained earnings. instead increasE RE. shouldnt Net income be lower by $500 so RE should be lower by 500. please explain the entry below

To record a journal entry for a $500 state tax expense without affecting cash but instead hitting retained earnings, you can use the following journal entry: Explanation: Debit: State Tax Expense $500 Credit: Retained Earnings $500