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

 
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Best answer 03-11-2019

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Established Community Backer ***

Although not required - I suggest you create an equity ty...

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.

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Hi Mike, I don't have an accounting and am new to book ke...

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!
Established Community Backer ***

Although not required - I suggest you create an equity ty...

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

Not applicable

Hi Mike, I don't have an accounting background and am new...

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!
Established Community Backer ***

use "dividend disbursed" or anything related to 'dividend...

use "dividend disbursed" or anything related to 'dividend' if its on your list
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That's the weird thing. I don't see anything with "Divide...

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! :)
Established Community Backer ***

The 'detail type' isnt very important - use any 'distribu...

The 'detail type' isnt very important - use any 'distribution' type as an alt
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Re: That's the weird thing. I don't see anything with "Divide...

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?