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E
evans-group1
March 23, 2021
Question

How to pay a shareholder a dividend

  • March 23, 2021
  • 1 reply
  • 0 views
when paying a shareholder a dividend I created a new chart of accounts Dividend payable. do I enter line one as a negative from my business account and second line a positive to shareholder? is that all?

1 reply

Rajanikanth
Rajanikanth
March 30, 2021

Hi, evans-group1

Create a new chart of account called Dividend disbursed and the Account Type - Owners equity, Detail Type - Dividend disbursed 

When the dividend payment is made use the cheque screen and select Dividend disbursed as the category.  

 

Feel free to contact me for any clarifications.

S
Shuru
July 11, 2023

Hi Rajinikanth!

 

I have few queries. To record a dividend paid, I first created a dividend account in chart of accounts by clicking current liability in account type and other current liability in detail type and named it as provision for dividend. Then I made a journal entry by debiting the retained earnings and crediting the provision for dividend. However in the balance sheet the current liability still showed as dividend payable. Also, my bank statement did not reconcile with QB. 

I was advised to create a dividend paid account in chart of accounts. In accounts I typed owners equity in detail type dividend disbursed and named it dividend payable.

In the journal entry I was asked to debit the provision for dividend and credit the dividend payable,

Now, in the balance sheet the dividend payable is zero.

I also made an expense entry to reconcile the bank balance.

Hope it is correct.

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