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Dividend Revenue for Trading Securities

Brian Krogol
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Alright, so the next journal entry that we may need to make is an entry for the dividend revenue if we receive any dividends from our investment. Well that's going to be revenue to our company. So let's check out an example on december 10th year one X. Y. Z. Company declared and paid a dividend of $1 per share. So in the previous entry we had purchased 500 shares, right? We had purchased 500 shares and these 500 shares are going to receive a dividend of $1 per share. So $1 per share dividend, that means we're going to receive from the 500 shares, times $1. Well we're gonna earn $500 from this investment and this is gonna be received in cash, right? They paid a dividend of a dollar per share. So each share is gonna receive $1. So that means we're gonna receive cash. So our debit is gonna be cash for 500 and our credit here is gonna be to dividend revenue. Okay so this is revenue to the company, we we bought this investment to try and earn money and this is us earning that money through this dividend revenue. And I want to make a quick point about dividend revenue because it's not our typical revenue right? Our company is not necessarily like an investment bank or some sort of brokerage where we're trying to make money on on investments like this, this is kind of a side thing we're doing with some X. Extra cash. So this is not our operating revenue. Okay so maybe this company is a t shirt company that sells t shirts. Well, we would show our revenue from selling t shirts at the top of our income statement. This revenue would be shown after our operating section. It would be shown in like our other um maybe like our non operating expenses and non operating revenues, gains and losses. So this would be shown after our operating section of our income statement. Okay, so it's not included with all our revenues, uh where we calculate gross profit and everything like that. So it's still revenue to the company, it's just not our core business, we're not an investment company. This is just a side thing that we're doing. Cool, so this isn't too complicated. We got some cash, we earned some dividend revenue. So let's go ahead and put it in here. Cash went up by $500 and we earned revenue. We earned that dividend revenue. That's gonna go to our income statement, and that's going to increase our equity by $500 as well. Cool, so that's about it for our dividend entries. We just have to find out what's the total amount that we received and that's what we're gonna receive as cash and put into our journal entry. Cool, let's go ahead and move on to the next journal entry