Retained earnings increases with each year's dividend

Here was my answer to the previous posting....

First, (pardon my naivete) what does the acronym DCA mean? Second, the only way that your Equity will still be overstated is if this DCA account is set up as an Equity account on Quickbooks. In essence you are decreasing (by dividend debit) equity and then increasing it again (by DCA Cr.).

Here are the usual/normal entries....

Declaration
DR Dividends
CR Dividends Payable << liability account

Payment
DR Dividends Payable
CR Cash

OR

Single Transaction
CR Cash
DR Dividends

Depending on the nature of DCA (which I think should be a liability account), make sure that the DCA is a LIABILITY account and NOT as equity on your Quickbooks setup. If you like, check the SETTINGS of each account that you think affects the numbers.
Or print out a balance sheet and see what sections the accounts appear.

With limited info, that is my initial diagnosis. ...and I reserve the right to be wrong......LOL

My advice is find a good accountant to unravel your books; better yet an audit (forensic) may be in order.

Wayne, I will just send him the bill! Half a day's work sounds good LOL...JK Anon

when dividends are paid from retained earnings .the following are the entries
dr.retained earnings
cr dividends
when it paid to the director
dr dividend a/c
cr cash/bank

in essence equity is not affected anywhere since the earnings are retained after dividends are proposed and set aside

I agree with John on the accounting aspect. Retained earnings get reduced to the extent that dividend is set aside for distribution. Equity remains unchanged.