Recording dividends in Xero
Journal entries - explained
Dividends require a manual journal entry in Xero. We post this on your behalf when a dividend is declared.
The journal entry
The entry is: debit Retained Earnings, credit Bank or Director Loan Account for the total dividend amount. After posting, the Retained Earnings balance on your Xero Balance Sheet reduces by the dividend amount. If you drew the dividend as a bank transfer, reconcile the payment against the journal entry during bank reconciliation.
💡 Good to know: Do not attempt to post dividend journals yourself. An incorrectly structured entry can distort the balance sheet. Tell us the amount and the date you want to pay, and we will post the journal as part of our monthly work.
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