[GNC] Recording dividend payoffs

Justin Mathew mjustin at protonmail.com
Tue Apr 16 06:49:41 EDT 2019


Hi,

I am trying to record cash dividend payoffs in gnucash. As per accounting basics, the 'Retained Earnings' is the company's net profit (minus dividends as well).

I also read this - https://www.double-entry-bookkeeping.com/capital/dividends/ which explained the same steps that I did. Or did I err somewhere?

Here is what I did.

When dividends are decided and calculated, I created a 'Dividend Declaration' account under 'Equity' and 'Dividend Payable' account under 'Liabilities'.

Then I made the entry of transaction of the amount of dividend to be paid to the shareholder in 'Dividend Declaration' against the corresponding account 'Dividend Payable'. The transactions are created in both the accounts. The total equity decreases creating a negative value in 'Dividend Declaration' account and total liability increases creating a positive value for 'Dividend Payable' account.

When the dividend is paid the the shareholder, the transaction is made in the account 'Dividend Payable' (this is the second transaction) against the corresponding asset account 'Current Account'. Naturally the money in the 'Current Account' decreases and the 'Dividend Payable' is now 0.

However, when I generate a balance sheet report, the 'Retained Earnings' doesn't reflect the dividend paid. It is supposed to subtract the dividend paid, but it doesn't.

-
Regards,
Justin Mathew
mjustin at protonmail.com

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