You are reading a single comment by @NotThamesWater and its replies.
Click here to read the full conversation.
-
The double entries when a dividend is declared are a debit to retained earnings and a credit to dividend payable.
Its a bit more than that, I think (as a non accountant seek professional advice don't listen to mine etc)
When declared: cr dividends payable, dr dividends
When paid: dr dividends payable, cr cash
cr dividends, dr retained earnings(Ordinarily, you'd expect dividends to be declared and paid close togertherr, particularly in a small limited.)
NotThamesWater
Basic information here.
https://www.gov.uk/running-a-limited-company/taking-money-out-of-a-limited-company
You can pay dividends on all available profits from current and previous financial years.
The aggregate value of previous year profits should be reflected in the Retained Earnings balance on the balance sheet. The double entries when a dividend is declared are a debit to retained earnings and a credit to dividend payable.
You shouldn't rely on this and you should seek expert advice.