Paying Out a corporate dividend - how?

Hello all,

I have small small business corporation and want to pay out a dividend to shareholders.  How do I do that in Simply Accounting (my version is 2007)?

What I did was set up a group account 3525 in the Retained Earnings section, then issued a cheque to the shareholder as a vendor, thereby crediting the bank account and debiting the account 3525.  This results in the total retained earnings increasing by the amount of the dividend.  Is this correct???

Your help would be appreciated!

 

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  • Thank you R Deering - my confusion stemmed from the belief that Retained Earnings was an asset class, and that debiting it would increase it.

    I was also confused as to how exactly the process went - that is, what exactly is done in Simply Accounting so that the shareholder receives the dividend and both the bank account and the Total Retained Earnings decrease.

    Also, when the T slip is issued, can Simply process it, or does it (the T-slip) need to be prepared manually for the shareholder?  Another point - there appears to be a distinction now regarding dividends (i.e. eligible and non-eligible.)  Which one of these is the one that a small business corporation would declare? 

    Again, your input is appreciated.

     David

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  • Thank you R Deering - my confusion stemmed from the belief that Retained Earnings was an asset class, and that debiting it would increase it.

    I was also confused as to how exactly the process went - that is, what exactly is done in Simply Accounting so that the shareholder receives the dividend and both the bank account and the Total Retained Earnings decrease.

    Also, when the T slip is issued, can Simply process it, or does it (the T-slip) need to be prepared manually for the shareholder?  Another point - there appears to be a distinction now regarding dividends (i.e. eligible and non-eligible.)  Which one of these is the one that a small business corporation would declare? 

    Again, your input is appreciated.

     David

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