Problem: How to record purchase of shares?
Solution: Use the program tools as shown.
If an entity purchases shares of third parties, then entry for investment in shares of another company may be done as:
Dr Stock investment
Cr Cash
In this journal entry, the stock investment account is an asset account on the balance sheet, in which its normal balance is on the debit side.
This stock investment can be a long-term asset or a short-term asset based on the purpose of the shares' investment that was made in another company.
1. Create a corresponding GL Account in Chart of Accounts for share acquisition or stock investments with section BS Current Financial Assets:
2. Create Cash Payment or Bank payment with type Other:
And choose created GL Account on the Payment Details tab and choose Company issued these shares:
3. This purchase will be reflected in Trial Balance accordingly:
Investment in shares that we have made in another company may bring dividend income.
And such dividends may need to be recorded as the dividend revenue, e.i. entry of debiting the cash account and crediting the dividend revenue account:
Dr Cash
Cr Dividend revenue
1. Create a corresponding GL Account in Chart of Accounts for share acquisition or stock investments with section PL Finance Income, or use Finance Income GL Account:
2. Create Cash receipt or Bank receipt with type Other:
Choose corresponding GL Account on the Payment Details tab and Income Item to recognize this receipt:
3. This dividend receipt will be reflected in Trial Balance accordingly:
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