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;

i.   AMP declare a dividend of $596.16 to a stockholder.
ii.  Instead of issuing the cash, they issue 153 shares with a purchase price of $3.91.
iii. These shares are worth $598.23, so the issuer reduces the stockholders suspense account by $2.07.
iv.  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.



Need more help?
Ask the Reckon Community at: https://community.reckon.com/reckon.

How did we do?

Share Price History lost after upgrading the data file.

I get the message "You do not appear to have a valid license key" when renewing my license

Related Articles

Processing Dividend Reinvestment in Reckon Personal Range
Incorrect Cash Balance in Investment Account after processing a Dividend Reinvestment in Reckon Accounts
Reinvest - Income Reinvestment option creates a cash transaction
Powered by HelpDocs (opens in a new tab)

Powered by HelpDocs (opens in a new tab)