Dividends Paid and Dividends Payable

AC1AC1 Member Posts: 2


I am trying to pay dividends but I am a little confused the the various accounts to be created. First, I read somewhere stated to create "Dividends Payable" in Due to You and Other Business Owners.
Is it required to create "Dividends Paid" in Retained Earnings?

What are the transactions to be posted?



  • EveresttaxandfinanceEveresttaxandfinance Member Posts: 3

    Hi the way I do is ;the first transaction is creating dividend payable when you declare dividend from retained earning and second transaction is dividend paid when the company pays dividend payables to shareholders. First entry is Debit Retained Earning, Credit Dividend Payable; second entry is Dividend payable Debit and Bank Credit.

    However, there are different tax implications between Dividend payable and Dividend Paid for small business.

    edited October 31, 2018
  • AC1AC1 Member Posts: 2

    Hi Everesttaxandfinance,

    Thanks for the reply. In the balance sheet, the profit is reflected in retained earning under Equity. But when I tried to post a journal entry, I can only find Owner's investment and Owner's equity, I cannot retained earning. Am I missing something?

    Thanks in advance!

  • EveresttaxandfinanceEveresttaxandfinance Member Posts: 3

    Hi AC1, I have retained earning in my balance sheet. I checked my account, I have retained earning; I mean I can do debit Retained earnings. I think, if you don't have the proper accounts, you could set up charts of accounts and map them accordingly. I did through journal entry;You should be fine.

    edited November 2, 2018
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