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Repaying a loan using dividends

Question asked by Inna Spivak 5 days ago

Hi, we have company owners that borrowed money from the company. We opened a separate Loan account for each of this owner and made the transfer in the system from the bank account to this Loan accounts. Now we want to repay this loans using dividends.

Please assist how to do it in the system

Thanks Inna

3 Replies

You can simply create a journal and:

Debit Dividends with the amount of the total dividend. Credit theLoan accounts in the ratio of the shares held the dividends to each shareholder.

You should also prepare a minute to approve the voting of the dividend. The total dividend must be paid out of profits already earned by the company.

Best wishes

Charles

Hi Inna,

Unfortunately, this is not possible. To do this you would need to pay the dividend as normal and then just create a money in to the loan account to show the dividend being paid back into the loan account. I would also advise speaking to an accountant also, just to be sure.

All the best,

Mohamed.

You can simply create a journal and:

Debit Dividends with the amount of the total dividend. Credit theLoan accounts in the ratio of the shares held the dividends to each shareholder.

You should also prepare a minute to approve the voting of the dividend. The total dividend must be paid out of profits already earned by the company.

Best wishes

Charles

Thank you Charles. This is what I did

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