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

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QuickBooks Online

Answer

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

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

Answer

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

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!

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