At the end of every financial year, a trustee will make distributions to a Trust's beneficiaries. AccountRight is very useful in handling the business affairs of a Trust and the distributions to beneficiaries.
How can I deal with beneficiary distributions at the end of the fiscal year?
Detailed below are the two steps involved with beneficiary distributions at the end of the fiscal year - modifying your Accounts List and distributing the income.
This can be a complex area and the scenario below might not suit your needs. You should always seek financial advice regarding the best solution for your circumstances.
The Accounts List will need to be adjusted slightly to reflect the distributions made to the beneficiaries. Set up liability accounts (using Account Type "Liability") for distributions made to the beneficiaries, but not yet paid. The account numbers will start with "2-", for example 2-9100. Each beneficiary should have a liability account.
Set up other expense accounts (using Account Type "Other Expense") called distribution to beneficiaries. The account numbers will start with "9-", for example 9-9100. Once again, each beneficiary should have a distribution account.
To create accounts, go to the Accounts command centre and click Accounts List. Click the applicable tab (Liability of Other Expense) then click New.
Make a general journal entry on the last day of the fiscal year (or in the 13th period if using 13 periods) to distribute income to the beneficiaries.
Debit the Other Expense (9-0000) accounts and credit the corresponding Liability (2-0000) accounts for the amount of profit distributed to each beneficiary.