Account Debit Credit Cash 000 Dividend income 000ĭividend income is usually presented in the other revenues section of the income statement. In this case, the company can make the dividend received journal entry by debiting the cash account and crediting the dividend income account. When the company owns the shares less than 20% in another company, it needs to follow the cost method to record the dividend received. Dividend received journal entry Holding shares of less than 20% Hence, it already recognizes the income from the investments when the investee reports the net income. This is due to the company needs to use the equity method where it records its share of the net income of the company it invests as its own income on the income statement.

On the other hand, if the company owns between 20% to 50% shares of stock of another company, it needs to record the dividend received as a reduction of its stock investments on the balance sheet. In this case, the dividend received journal entry will increase both total assets on the balance sheet and total revenues on the income statement.

If the company owns less than 20% shares of stock of another company, it can record the dividend received as the dividend income.

Likewise, the company needs to properly make the journal entry for the dividend received based on whether it owns only a small portion or a large portion of shares. When the company makes a stock investment in another’s company, it may receive the dividend from the stock investment before it sells it back.

Trust receipt accounting entries