How do I record dividends paid to shareholders as shareholder loans? Thanks

Deb21 · ‎March 11, 2019

Anonymous · ‎March 11, 2019

Although not required - I suggest you create an equity type account for dividends issued.

To pay the dividend post journal entry: DR Dividends paid - CR shareholder loan.

At the beginning of the next fiscal year close the dividend account by journal entry: DR Retained Earnings - CR Dividends Paid.

Remember to do the Directors & Shareholders resolutions to authorize a dividend, and issue T5 slips in Feb next year.

View solution in original post

mark37 · ‎March 11, 2019

Hi Mike, I don't have an accounting and am new to book keeping. I was hoping you might be able to help me understand this a little more. When creating the "Dividends" account type, I can find the "Equity" Account Type but I'm not sure what "Detail Type" to select. It's required so this is preventing me from creating the new account. For the "Shareholder Loan" account, what Account and Detail Type should I select? Thanks so much!

Anonymous · ‎March 11, 2019

Although not required - I suggest you create an equity type account for dividends issued.

To pay the dividend post journal entry: DR Dividends paid - CR shareholder loan.

At the beginning of the next fiscal year close the dividend account by journal entry: DR Retained Earnings - CR Dividends Paid.

Remember to do the Directors & Shareholders resolutions to authorize a dividend, and issue T5 slips in Feb next year.

mark37 · ‎March 11, 2019

Hi Mike, I don't have an accounting background and am new to book keeping. I was hoping you might be able to help me understand this a little more.

When creating the "Dividends" account type, I can find the "Equity" Account Type but I'm not sure what "Detail Type" to select. It's required so this is preventing me from creating the new account.

For the "Shareholder Loan" account, what Account and Detail Type should I select?

Thanks so much!

Anonymous · ‎March 11, 2019

use "dividend disbursed" or anything related to 'dividend' if its on your list

mark37 · ‎March 11, 2019

That's the weird thing. I don't see anything with "Dividend" in it at all, though I would expect I would here. I'll send a message to my accountant and see if he can sort it out, then post what I find in case anyone else runs into this.

Thanks Mike! :)

Anonymous · ‎March 11, 2019

The 'detail type' isnt very important - use any 'distribution' type as an alt

KickingAssets · ‎March 27, 2019

I had the same problem. I ended up using "Partner Distribution" which I don't particularly like because the description says it's meant for something else. But there was nothing "dividend" related. Was your accountant able to help you with that?

Topics

Training

Community

Resources

How do I record dividends paid to shareholders as shareholder loans? Thanks