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  • Dividends

    I shall be taking a dividend payment each month, how do I record it properly please

  • #2
    Credit entry to Dividends Received (an Other Income account)
    Debit entry to Undeposited Funds (as Asset account) or to the appropriate bank account (also an Asset account) -- dependent on how you usually handle revenues coming into the business.

    IGNORE THE ABOVE. I misread the original post. My reply was the procedure for recording dividends received from outside your company

    If you are incorporated or a member of a partnership, then follow the procedure given by RushkinF below.

    If you are not incorporated (which is what I suspect) and are a sole proprietor, then there is nothing to report at tax time. Sole proprietors do not take dividends -- they take withdrawals which are neither an expense to the company nor income to you. The recording in QuickBooks affects only Balance Sheet Accounts (a credit entry to your bank account and a debit entry to Retained Earnings). It is useful but not necessary to have a subaccount of Retained Earnings, usually something like Owner's Withdrawal.
    Last edited by Lorin Browning; 02-10-2020, 02:56 PM.
    Lorin Browning, Ph. D.
    Fellow -- National Tax Practice Institute


    • #3
      Thankyou for your help


      • #4
        I found these detailed steps. This would help you, in addition, to the answer by Lorin Browning.
        Create the Dividend Accounts

        1. Click the "Lists" menu and select "Chart of Accounts."

        2. Click the "Account" button, and then click "New."
        3. Click the "Type" field and select "Other Current Liability." Enter "Provision for Dividend" in the Name field.

        4. Complete the necessary fields in the New Account window. Consult your accountant to determine the correct Tax Line to use for the Tax Line drop-down list.

        5. Click "Save & Next" to create a new Dividend account.

        If you plan to use a Retained Earnings account, click "Save & Close." You do not need to create a Dividend Issued account when using Retained Earnings.

        6. Complete the steps to create a new account and select "Other Current Expense" or "Equity" from the Type drop-down list, depending on the method used to account for dividends in your business. Type "Dividend" in the Name field.

        7. Complete the remaining fields, then select "Save & Close."

        Record Dividends

        1. Click the "Company" menu and select "Make General Journal Entries."

        2. Click the "Account" column and select the "Retained Earnings" account from the drop-down list if you are using a Retained Earnings account to track dividends. Enter the amount of the dividend in the Debit column. Write a memo, if desired.
        If you are using an Equity or Other Current Liability accounts, select the "Dividend" account from the Account drop-down list. Enter the debit to the Dividend account in the Debit column.

        3. Click the "Account" column on the next line and select the "Provision for Dividend" account from the account list. Enter the amount of the dividend in the "Credit" column to offset the debit from the Retained Earnings account.
        If you are using an Equity or Other Current Liability accounts, select the "Provision for Dividend" account from the Account drop-down list. Enter the credit to the Provision for Dividend account in the Credit column.

        4. Review the "Date" and "Entry No." fields, and adjust as necessary. Click "Save."

        I hope this helps!