Reckon Accounts Personal: Handling Dividend Reinvestment Plans (DRP)

Legacy KB ID: 3137

Question

How do I deal with a dividend reinvestment plan (DRP)?

Answer

When shares are issued under a dividend reinvestment plan, it is fairly common for the number of shares issued to be rounded to a whole number, with the resulting difference in value being assigned by the issuer to a holding/suspense account for the holder.

Use the Buy/Add easy actions option to enter the purchase then create a new bank/savings account to hold the left over funds (usually a small amount that will be used later to purchase more stock).

For Example;

1. AMP declare a dividend of $596.16 to a stockholder.
2. Instead of issuing the cash, they issue 153 shares with a purchase price of $3.91.
3. These shares are worth $598.23, so the issuer reduces the stockholders suspense account by $2.07.
4. Then you need to enter this in, this cannot be done in the 'Reinvest income transaction window'.

To Enter this in see the following;

Using the example above..

1. Record an income event (for say 596.16) for the dividend.
2. Enter a buy for the shares (153 at $3.91).
3. Set up an asset or liability account
4. Transfer $2.07 to the account that purchased the shares.

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