Dividend declared but unpaid at end of year

Accounting
1

Hello,

Normally dividends are paid by transfer from dividend paid to director’s loan account (sole shareholder). However at year end I wish to declared a final dividend that will be unpaid at the year end date (to avoid DLA showing up as overdrawn).

To achieve this do I do the following?
At declaration date:
Debit: Retained Profit & Undistributed Reserves (not sure this is correct journal)
Credit: Dividends Payable

At payment date:
Debit: Retained Profit
Credit: DLA

Thank you
Dan

2

Dr Final Dividends
Cr Dividends payable

on payment

Dr Dividends payable

Cr bank

3

If you are just trying to avoid DL for P11D purposes then there is a minimum to declare, you may be adding work for no reason.

1 Like
4

Thanks for the replies!