ACCOUNTING FOR DIVIDENDS
To automate dividend processing, XFlow uses an intermediary Dividend Account (GE3400) under the General & Administration Expense category before ultimately impacting retained earnings. The workflow is as follows:
1. Declaration
- Debit the declared dividend amount to Dividend Account (GE3400).
- Credit the same amount to Dividend Payable.
2. System Transfer
- Through built-in coding logic, XFlow moves the balance from the Dividend Account to Retained Earnings, ensuring your expense accounts remain clear.
3. Reporting Impact
This intermediary step provides clear data feeds for:
- Statement of Changes in Equity
- Statement of Cash Flows
ACCOUNTING FOR BONUS SHARE ISSUANCE
Bonus shares follow a parallel process using a dedicated Bonus Shares Account (GE3500), also within General & Administration Expenses:
1. Issuance
- Debit the Bonus Shares Account (GE3500) for the total value of shares issued.
- Credit the Share Capital account for the same amount.
2. System Transfer
XFlow automatically shifts the temporary balance from GE3500 into Retained Earnings, completing the equity adjustment.
RESERVE-BASED ALLOCATIONS
If dividends or bonus shares are drawn from a specific reserve account rather than retained earnings:
- You must manually post a journal entry to move the amount from Retained Earnings to your designated reserve account.
- This ensures the reserve balance reflects the correct source of funds.
Tip: Review your dividend and bonus-share journal entries regularly to confirm that XFlow’s automated transfers align with your corporate reserves and equity structure.