What are the accounting entries of the company's profit distribution
When an enterprise distributes profits, it generally sets the profit account of the current year and the profit distribution - undistributed profit account for accounting. What about the corresponding accounting entries?
What is the profit distribution accounting entry?
Profitable in the current period:
Debit: Profit of this year
Credit: profit distribution - undistributed profit
Loss incurred in the current period:
Debit: profit distribution - undistributed profit
Credit: Profit of this year
What is the relationship between profit distribution and this year's profit?
1. The "profit of the current year" account is the owner's equity in terms of economic content, and the financial achievement calculation in terms of use and structure. In the daily accounting of the enterprise, all expenses and incomes incurred have been included in the relevant income and expense accounts. On this basis, at the end of the period, the profits (or losses) realized in the current period can be determined by comparing all incomes with all expenses.
2. Profit distribution refers to the distribution of profits realized in the current year or the recovery of losses incurred in the current year according to relevant regulations. Therefore, the "Profit Distribution" account is used to calculate and supervise the profit available for distribution (or the loss to be made up) of the enterprise in the current year and the balance after distribution (or the balance after loss coverage) over the years.
What is the lending direction of profit distribution?
The debit is the distributed profit or transferred loss, and the credit is the transferred net profit. The ending balance of the credit of the "profit distribution - undistributed profit" account after carrying forward at the end of the year reflects the accumulated undistributed profits, and the ending balance of the debit reflects the accumulated uncovered losses.
Level 2 detailed account of profit distribution
The profit distribution account has the following secondary detailed accounts: withdrawal of statutory surplus reserve, withdrawal of discretionary surplus reserve, cash dividends payable, surplus reserve to cover losses, undistributed profits, undistributed profits (or unrecovered losses).