Distributions

 When we receive dividends from the investment or when we sell the one of the investments we have & realized those proceeds, we will distribute the proceed received from those investments to the investors.

For our Client funds we will distribute the proceeds only if the amount to be distributed is 2 percent or more than 2 percent of the commitment, so it will be different for different Client according to the wish of those fund managers, we can know those rules from LPA of the respective fund.

The following will be the accounting entries we will post during distribution.

When we receive distribution, we can know the same from the emails.

If we miss the email we can know the same while posting daily cash booking. Generally while posting the journal entries we see the narration in the bank statement & we know the type of expense by narration, if there is any income in the bank statement & if we already check the email regarding distribution (99 percent of the cases we do) we will post the same in the journal entry.

Received dividend or other income from the investment:

Cash received a/c           Dr

         To Dividend/ Other income a/c

Received proceeds from realization of One of the investments:

Cash received a/c          Dr

        To Investment a/c

Gain on sale & Unrealized gain also recognized previously:

Cash received a/c           Dr

Unrealized gain a/c        Dr

         To investment a/c         

         To Realized gain a/c

While distributing the proceeds to the investor:

Return of capital a/c          Dr

ROC dividend a/c              Dr

        To Cash paid a/c

Recallable Distribution:

If the fund is still in the investment period, some while distributing the proceeds fund will mention that the distribution is recallable, meaning the proceeds distributed can be called again from the investors. 

In that case this distribution will increase the Unfunded Commitment of the fund. Entries will be same as above.

Distribution notice:

The notice will be same as the capital call notice where we mention all the details of the distribution like investments from which distribution proceeds received, recallable or non recallable, distribution as a percentage of commitment, date by which proceeds will be credited to the investor accounts etc.


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