Accounting of dividend reinvestment plan

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Sanjay Kavadia

Sanjay Kavadia (Querist)
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19 February 2013 How to do accounting for units received under dividend reinvestment plan

CA. Sunil Kumar

CA. Sunil Kumar (Expert)
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20 February 2013 Dividend reinvestment plan is something where dividends are invested into additional shares of the company directly.

1.Retained earning
To dividend payable.
( To record the declaration of dividend)
2. Receivable
To share capital
( To reflect the allotment of ordinary shares for which issue price hasn’t been settled)
3. Dividend payable
To dividend receivable
(to record the app of dividend payable against the amount payable for shares)