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    Nervous Newbie


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    Default Dividend & Book keeping

    I'm doing the book keeeping of my ltd myself and i don't know how to record a dividend paiement into the account.
    I know the process of meeting minutes/dividend tax vourcher but when you really pay the dividend out the company account, i don't know against which account of the standard chart of account to use.
    If somebody can give me the example of journal they use, would be gratefull.
    Thanks.

  2. #2

    Nervous Newbie


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    Default

    You'll definitely need to include it in your cash flow statement as an outflow (if you prepare a cash flow statement).

    Dividends that have been declared, but not yet paid, would appear as a current liability on the balance sheet. Dividends already paid do not appear on the balance sheet as they are no longer in the business.

    On the Profit and Loss Account / income statement you would record the dividend declared below net profit after tax.
    Disclaimer: I might not know what I'm talking about!

  3. #3

    Godlike

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    Default

    Agreed. Specifically, divi owed at year end will usually be in BS under other creditors (includes directors). On P&L subtracting divi from net profit after tax gives you retained profits for the year figure, should be explicit in the P&L sheet you are using.
    bloggoth

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