There are several key steps and circumstances to consider for the bookkeeping treatment of earnings and earnings distributions for the current year.
First of all, the distribution of profits can be recorded by debiting the Profit This Year account and crediting the Profit Distribution account. The specific amount can be adjusted on a case-by-case basis.
Secondly, the distribution of profits may also involve the withdrawal of statutory surplus reserves. According to the regulations, a part of the profits needs to be retained as a statutory provident fund, which is generally 10% of the after-tax profits. This amount can be determined according to the specific situation of the enterprise and the resolution of the general meeting of shareholders. When bookkeeping, it can be recorded by debiting the Profit Distribution account and crediting the Surplus Reserve - Statutory Surplus Reserve account.
The following are examples of bookkeeping processing in different situations:
Case 1: Company A's undistributed profit at the beginning of the year was 4 million yuan, and the net profit after tax for the year was 19 million yuan, and decided to withdraw 8% of the arbitrary surplus reserve and distribute cash dividends of 8 million yuan to shareholders.
The bookkeeping process is as follows:
1.Borrow: Profit for the year 1900
Credit: Profit distribution 1900
The amount of surplus CPF withdrawn is as follows:
Statutory surplus reserve = 1900 10% = $1.9 million.
Discretionary surplus reserve = 1900 8% = 1.52 million yuan.
Total surplus reserve = 190 + 152 = $3.42 million.
2.Borrow: Profit distribution 342
Credit: Surplus Reserve - Statutory Surplus Reserve 190
Surplus Reserve - Discretionary Surplus Reserve 152
Finally, the profit distributed by the company to shareholders is: 400 + 1900 342) = 19.58 million yuan, of which 8 million yuan is distributed to shareholders in cash dividends.
The bookkeeping process is as follows:
Borrow: Profit distribution 800
Credit: Dividend payable 800
Case 2: If the undistributed profit at the beginning of the year is 7 million yuan, the loss of 3 million yuan will be incurred this year.
The bookkeeping process is as follows:
Borrow: Profit distribution - undistributed profit 300
Credit: Profit for the year 300
In this case, there is no profit available for distribution due to the occurrence of a loss.
In addition, the following points need to be paid attention to for the tax-related issues of profit distribution:
1.Natural person shareholders are subject to 20% individual income tax on interest, dividends and bonuses received from profit distribution.
2.After-tax profit dividends of resident enterprises are not subject to corporate income tax.
3.Non-resident enterprises are subject to 10% corporate income tax on profits and dividends obtained in China, unless the tax treaty with China stipulates a lower tax rate.
Finally, the provisions on the withdrawal of the statutory surplus provident fund:
1.Companies are usually required to withdraw 10% of their after-tax profits as statutory surplus provident fund, unless more than 50% of the company's registered capital has been accumulated as statutory provident fund.
2.If the cumulative amount of the statutory provident fund has reached more than 50% of the registered capital, it can also continue to be withdrawn according to the shareholders' resolution or the provisions of the company's policy, and the specific practice needs to be combined with the actual situation of the company.
3.The withdrawal of any provident fund must be decided by the general meeting of shareholders and cannot be withdrawn without authorization.
These are some common situations and regulations, and the specific bookkeeping treatment and tax-related issues need to be adjusted according to the specific situation and relevant laws and regulations in actual operation. Financial Accounting