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 > mjus...@protonmail.com > > Sent with ProtonMail Secure Email. > > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. -- Maf. King PGP Key fingerprint = 8D68 A91F 733B 2C1F 43B7 2B7C E591 E8E1 0DE7 C542 _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
