[GNC] Recording dividend payoffs

[Maf. King]

Hi Justin,

while it is contrary to the advice given in the link you supplied, I've always 
recorded dividend payouts as an Expense  - but it is one of a handful that are 
excluded from the corporation tax calc, as they are declared after tax / from 
profits. 

My accountant has never complained - UK regs -  YMMV, of course!

Maf.



On Tuesday, 16 April 2019 11:49:41 BST Justin Mathew via gnucash-user wrote:
> 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
> 
> Sent with ProtonMail Secure Email.
> 
> 
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-- 
Maf. King
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