Company has declared a dividend

Kathy Komadina
Kathy Komadina Member Posts: 16
edited May 2018 in Accounts Hosted
Our company has declared a dividend at the end of 30 June 2017 and I have no idea how to enter this into Reckon Accounts Hosted. It will be a fully franked dividend. This is the first we have ever declared. Could someone help me with the journal entries? Should I be setting up new accounts?
In addition to this, the dividend is payable to a subsidiary which I will also then need to record the dividend receivable.
Any help would be greatly appreciated!

Comments

  • John Gibson
    John Gibson Accredited Partner Posts: 47 Accredited Partner Accredited Partner
    edited May 2018
    Set up new accounts:
    Equity type - Dividends Paid (maybe another as a Current Liability called Dividends Payable if payment is deferred for any reason)
    When the dividend is distributed, simply allocate the payments to Dividends Paid (which effectively is a reduction of the Retained Earnings of the company)
    In the receiving company, set up Dividends Received (or Dividends Receivable) - I typically create as 'Other Income' type accounts. Ignore the franking, record the actual amount, but in the memo section note the franking amount so the accountant can properly account for the dividend in the company tax return

    As this was for 30/06/2017 and probably paid after that date, the entry would be Debit Dividends Paid, Credit Dividends Payable - then when paid from the bank the transaction gets allocated to Dividends Payable to clear
  • Kathy Komadina
    Kathy Komadina Member Posts: 16
    edited May 2018
    Thanks so much John, that makes sense!