Dividends are part of the appropriation of a company's profit. The dividend amount is decided by the board of directors of a company and then agreed by the shareholders of the company.

Appropriation of profit should appear on the Profit and Loss report after the net profit figure. As Sage Accounts does not allow this we suggest the dividend entries be posted to a nominal code in the Capital and Reserve section of the Balance Sheet report and a liability nominal code on the Balance Sheet report, where it remains until paid.

The dividend value in the Capital and Reserve section of the Balance Sheet report can either remain in the dividend account, or be moved to the profit and loss nominal code.

This article contains the following sections:

• To create the dividend nominal codes - Before you record dividends in Sage Accounts, you should create the required nominal codes.

• To record the proposed dividend - When you decide on the proposed dividend amount, you should record this in Sage Accounts. When posted, this value appears as a Liability on your Balance Sheet report, and updates the Capital and Reserves section of your Balance Sheet report.

• To pay the dividend - When you are ready to pay the dividend, you should post a bank payment to the Dividend Liability nominal code. This reduces your bank account balance and the balance on the Dividend Liability nominal code.

• To journal the value from the Dividend nominal code to the Profit and Loss nominal code - After posting the dividend transactions, the balance remains on the Dividend nominal code, 3201. You may want to move the balance from this account, to the Profit and Loss nominal code either at some point during the year, or after running the year end. This ensures that the balance on the Dividends account only relates to the current year.

To create the dividend nominal codes

If the following nominal codes are not present on your Nominal list, you should create them before proceeding. If you already have these nominal codes, then please proceed to the following section To record the proposed dividend. If you are using the Sage default Nominal ledger structure, we suggest you use the following codes:

1. Open the Company module, from the Links pane select Nominal Ledger then click Record.

   Sage Accounts v11.xx and below - Open the Nominal Ledger window then click Record.

The Nominal Record window appears.

2. Complete the Nominal Record details as follows:

• In the N/C box, enter the new nominal code, for example, 3201.

• In the Name box enter the nominal code name, for example, Dividends.
  
  Note: For further information about the new nominal codes, please refer to the above table.

3. To save the new nominal code, click Save.

   Tip: If required, to exit without saving, click Discard then click Close.

   The nominal code is created and the Nominal Record clears.

   If required, repeat steps 2 and 3 to create further nominal codes.

4. To close the Nominal Record and return to the Nominal Ledger window, click Close.

You have now created your new nominal codes. You should also check your Chart of Accounts to ensure that the new nominal codes you have created are correctly represented. For further information about this, press F1 to open the Help system.

When you are ready to record the proposed dividend, please refer to the following section.

To record the proposed dividend

Note: In this example a proposed dividend of £5000 is to be recorded.

1. Open the Company module, then from the Tasks pane select New Journal.

   Sage Accounts v11.xx and below - Open the Nominal Ledger module then click Journals.

   The Nominal Ledger Journals window appears.

2. Enter a date and reference for the transaction, then enter the relevant details to record the proposed dividend, for example:

3. To post the journal, click Save.

   Tip: If required, to exit without saving, click Discard then click Close.

   The journal is posted and the Nominal Ledger Journals window clears.

4. To close the Nominal Ledger Journals window and return to the Nominal Ledger window, click Close.

You have now recorded the amount of dividend to be paid. For further information about paying the dividend please refer to the following section.

To pay the dividend

Note: In this example, you are paying a dividend of £5000.

1. Open the Bank module then, from the Bank toolbar, click Payment.

   The Bank Payments window appears.

2. Enter the details for the bank payment in the boxes provided, for example:
   
   

   Bank	Date	N/C	Details	Net	T/C	Tax
   1200	Payment date	2290	Payment of dividend	5000.00	T9	0.00

3. To save the payment, click Save.

   Tip: If required, to exit without saving, click Discard then click Close.

   The bank payment is posted and the Bank Payments window clears.

4. To close the Bank Payments window and return to the Bank Accounts window click Close.

   The Bank Accounts window appears.

To journal the value from the Dividend nominal code to the Profit and Loss nominal code

1. Open the Company module, then from the Tasks pane select New Journal.

   Sage Accounts v11.xx and below - Open the Nominal Ledger module then click Journals.

   The Nominal Ledger Journals window appears.

2. Enter a date and reference, then enter the relevant information to record the transfer of the dividend liability, for example:
   
   

   N/C	Name	Details	T/C	Debit	Credit
   3200	Profit and Loss Account	Dividends	T9	5000.00
   3201	Dividends	Dividends	T9		5000.00

3. To post the journal, click Save.

   Tip: If required, to exit without saving, click Discard then click Close.

   The journal is posted and the Nominal Ledger Journals window clears.

4. To close the Nominal Ledger Journals window and return to the Nominal Ledger window, click Close.

You have now successfully recorded the transfer from the Dividend nominal code to the Profit and Loss Account nominal code.