What will be the entry for Dividend

[zia397]

Can anyone help me to show what entry will be required in the books of accounts for the purchase of some shares of a company on 25th June. The books accounts of my company are going to be closed on 30th June. It is expected that the dividend of $4 per share will be declared in July by the company whose share I have purchased. The accounting entry for dividend may also be advised.

 

[mike99]

When the shares are purchased:
Dr Investment in Company X (Asset)
Cr Bank/Payables

When the dividend is declared:
Dr Dividends receivable (Asset)
Cr Dividend income

When the dividend is received:
Dr Bank
Cr Dividends receivable

If they were purchased cum-div, then the following:
Dr Investment (clean price)
Dr Dividend receivable
Cr Bank/Payables

 

[zia397]

Thanks a lot