We purchased stocks of some other companies as part of our short term investment plan. Now, we are receiving dividend from those companies. How should we account it?
Say, for example, we have stock of:
They are giving us 15% dividend twice a year (one is interim and another is final). How can we enter it?
For reporting purpose, we need to figure out how much each of the companies are paying us. Ideally, we could have created an entity for each for tracking. But, they are not our customer or vendor or employee (These three can be assigned while creating a company in Quickbooks).
Good day to you! I am here to assist you on your query.
There are 2 portions you will need to record the short term investment:
Purchase of the stock/shares - Financial Asset account (Current/Non-current asset account)
Dividend income - Other income account (Income account)
For purchase share investment, you can use "Expense" function (+ > Expense) to record the purchase. Under the expense page > Account details : select "Financial Asset" account > Input amount purchase > Save and close
For dividend income, you can use "Bank Deposit" function (+ > Bank Deposit) to record the income. Under the bank deposit page > Add funds to this deposit > Accounts: Dividend income > Input amount > Save and close
To track the income for each stock, you can create 3 dividend income chart of accounts and record the dividend income to the respective account. By doing so, you can track income of each shares by checking the profit and loss report.
As this is a general recommendation for you to bookkeeping your shares asset and dividend income. For more accurate, would recommend if you can consult your accountant for more professional advise :)
I hope you find this useful and have great day ahead!