How to Reconcile Dividend Payments

Dividends are the profits that a company pays out to shareholders. it is important to ensure that the correct dividends are paid out to shareholders. To do so, you need to reconcile the dividend payments. Effectively, this involves measuring the decrease in retained earnings against the dividend payments. If there is no difference between the figures, your dividends are reconciled.

Instructions

1. Write down the retained earnings prior to the dividend payment.

2. Subtract the current retained earnings from the previous figure. This will give you the decrease in retained earnings.

3. Divide the decrease in retained earnings by the number of stocks outstanding. This will give you the decrease in retained earnings on a per-share basis.

4. Subtract the amount of the dividend payment -- measured on a per-share basis -- from the decrease in retained earnings. If the difference is zero, then your dividends are reconciled. If the result is anything but zero, there are errors in the financial records.

References

• "Financial Accounting: An Introduction to Concepts, Methods and Uses"; Clyde P. Stickney et al.; 2009