Defining income allocation

Use the Define Income Allocation function to allocate the percentage of distribution to beneficiaries without having to manually enter journals.

Income Allocation accounts

For all entities, check that the correct Income Allocation accounts are set up in MYOB Ledger.

If your client is a...

We recommend...

Trust

Partnership (fixed $ amount of profit distributed)

Fund

Do a manual journal at the end of the period to distribute profit to each beneficiary. Automatic distribution only works for percentages of profit distributions, not fixed amounts.

If you're using a standard MYOB chart of accounts, on rollover to the next financial period, a reversal journal is automatically created at the beginning of the period.

Partnership (percentage of profit distributed)

Individual

If you'll be distributing a percentage of profit or loss at the end of the period, you can use the income allocation function to automate the profit distribution at the end of each period.

A percentage of profit or loss will automatically be allocated to each partner's Current Year Earnings account at the end of the period.

Company

Association

By default, MYOB Ledger will distribute 100% of profit or loss to your Current Year Earnings system account and, on rollover, will balance forward to your ledger's Retained Earnings system account. However, you may want to review the income allocation to ensure the correct account codes are being used.

Use the following tables to check the correct accounts to use.

Accounts GL: Income Allocation Accounts

Accounts	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes
System Account	Company	Partnership	Individual	Trust Other	Unit Trust	Association	Super Fund
Retained earnings	528	1.585	1.585	528	528	528	528
Current Year Earnings	1000	1.590	1.590	1000	1000	1000	1000

MAS GL: Income Allocation Accounts

MAS	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes
System Account	Company	Partnership	Individual	Trust Other	Unit Trust	Association	Super Fund
Retained earnings	638	50100	50100	50001	50001	638	55001
Current Year Earnings	639	50102	50102	50002	50002	639	55002

AO Classic GL: Income Allocation Accounts

AO Classic General Ledger	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes	GL Codes
System Account	Company	Partnership	Individual	Trust Other	Unit Trust	Association	Super Fund
Retained earnings	638	501/00	501/00	500/01	500/01	638	550/01
Current Year Earnings	639	501/02	501/02	500/02	500/02	639	550/02

AccountRight/Essentials GL: Income Allocation Accounts

For AccountRight and Essentials ledgers, the default system accounts for all entities are:

3-8000 Retained earnings
3-9000 Current year earnings.,

If you have a partnership or trust entity, see Setting up Trusts and Partnerships in AccountRight/Essentials for reporting in Statutory Reporter for detailed information on how to set up your client's company file.

Defining partners

If your client is a partnership, you need to define:

each partner
the partnership income allocation in MYOB Ledger to set the percentage of profit that is to be distributed to each beneficiary.

To define partners

On the TASKS bar, click Launch AE/AO Ledger.
Click Settings > Income Allocation. The Income Allocation window appears.
Click Manager Owners.
Click the drop-down arrow.
Check each owner and, using the Income Allocation Accounts table above, check that the correct retained earnings and CYE accounts are used.

To define partnership income allocation

On the TASKS bar, click Launch AE/AO Ledger.
Click Settings > Income Allocation.
To display the owners, click the drop-down arrow next to the current period.
Enter each partner and their partnership (equity) share.
Click Save. This sets the percentage of profit that is to be distributed to each beneficiary.

Different distribution percentages can be allocated for different periods.
To add a new period allocation:
1. Click Add Allocation.
2. Enter the financial year from which the new allocation is effective.
3. From the drop-down list, select the beneficiary and allocate the percentage.
  
  The percentage total must be 100%.
  
  Client Accounting automatically creates a distribution journal and allocates profit to the beneficiaries.