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How do I set up my accounts to record dividends paid out to shareholders?
Hi there: Dividends are paid out of Retained Earnings. In the Chart of Accounts I have that account is 3560. Some people like to set up a separate account in this section called Dividends Paid just so they can keep track of them separately and then journalize them out of there and into the Retained Earnings account at year end. (Letting the Accountant take care of it usually after they make sure that the payments made are in fact dividends.) R. Deering
So how exactly would I record the transaction? Thanks.
Hi again: Recording the transaction depends on how you are doing it. Are you writing a cheque and actually paying out the dividend? If so, do you do hand written cheques that need to be recorded or do you do printed cheques out of the Simply program? Or perhaps you are not going to pay out the dividend, but just want to have it credited to their Shareholder's Loan account. More information about what EXACTLY you are planning to do would help. The recording will be simple once I know what the plan is. R. Deering
Hi, thank you so much for your help. I am actually paying out the dividend with a hand written cheque. Thanks again.
Hello. I saw this post and hope you can help. I am trying to put this journal entry into a shareholders loan...
Currently I have 27000 in a shareholders loan and I want to declare that amount of dividends.
I tried to dr/cr the SHL acct for 27000 and dr/cr Retained Earnings but Simply accounting will not let me use the RE account.
Your help is greatly appreciated.
Hi there: When you say you currently have 27,000 in a shareholder's loan account, is the account a debit balance or a credit balance? Are you actually paying the 27,000 out by cheque to the shareholder?
You said you tried to dr/cr the S/H Loan account and dr/cr Retained Earnings -- which is it? Do you want to debit or credit the S/H Loan account?
You need to open a new account called Dividends Paid in that section of your Chart of Accounts where the Retained Earnings account is located. You will need to put one side of the entry to this new Dividends Paid account. Please say whether you are trying to debit or credit the Shareholder's Loan account. Rita Deering
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