Trusts and Partnerships
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    Trusts and Partnerships

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    Article summary

    Trusts and Partnerships

    Where the JobBag database is being run for a Trust or a Partnership, the beneficiaries (Trust) or partners need to have accounts set up in the Equity section of the ledger that reflect their entitlements in the business. Note that in Trusts and Partnerships, the profit of the enterprise must be distributed to the Beneficiaries/Partners, it can’t be retained within the trust. I.e. there should be no Retained Earnings in a Trust or Partnership.

    At the end of the financial year (normally), the final profit is calculated and then distributed to the beneficiaries/partners by way of a General Journal:

    Account

    Report

    Debit

    Credit

    Beneficiary A Distributions (Partner A Share of Profits)

    Balance Sheet


    37,500

    Account Structure for Trusts

    In a Trust database, each beneficiary needs to have their own account structure:

    Account Name

    Account Type

    Totaling Mode

    Beneficiary A Trust Distributions

    Posting account

    Period to Date, reset to the Opening Balance account

    Beneficiary A Closing Balance

    Total Account

    Period to Date, total accounts do not get reset, their balances are calculated from the accounts that add to them.

    Repeat this structure for each beneficiary.

    Account Structure for partnerships

    In a Partnership database, each Partner needs to have their own account structure:

    Account Name

    Account Type

    Totaling Mode

    Partner A Share of Profit

    Posting account

    Period to Date, reset to the Opening Balance account

    Partner A Closing Balance

    Total Account

    Period to Date, total accounts do not get reset, their balances are calculated from the accounts that add to them.

    Repeat this for every Partner.


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