I’m having issues getting my head around how to process this.
Say on 1st October, £1000 of dividends are declared to be paid. I journal the money from retained earnings to dividends payable (current liability account) and this is reflected correctly on the balance sheet. I now pay the dividends out monthly at £200 a month for 5 months. If I just process the payments from the bank feed and post them to “dividend payable”, although my current liability goes down, it doesn’t address on the balance sheet the dividend paid (other expense account).
I then considered I could journal from retained earnings to dividends paid, and then from dividends paid to dividends payable but I don’t think that would give me what I want either. Essentially at say 1st November I want my balance sheet to say;
- dividends payable (current liability) £800.
- dividends paid (current expense) £200.
-retained earnings £1000 less than before.
-bank feed transactions to be posted somewhere.
Can anyone help with my technical problem? I’m sure I’m missing something obvious.
