DRIP question

[moonlighter]

How do I record a dividend reinvestment where the dividend is actually paid in alternate shares. E.g. My preferred shares earned a DRIP payment but they pay the dividend reinvestment in the form of common shares. Thanks!

[Mark]

Hi moonlighter,

It sounds like this would be recorded as a distributed distribution in the first company, and a purchase in the second company.

[moonlighter]

You're right, I did it that way. Easy. I was thinking there could be some way to have the proceeds of the dividend flow directly into the common shares without flowing through the cash account. But then realized the tax man would not look favourably on that! My broker does show the dividends paid in cash first and then the common shares are bought.