Quick Advice..........Dividends

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
When you get a journel entry of debit dividends credit dividends payable. I know that dividends are the last thing to be taken away on the income statement, where are they featured on the balance sheet?

Within trade payables or on the bottom half of the balance sheet?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    I don't even trust myself anymore but:

    Dividends will be in the bottom part of your balance sheet deducted from retained earnings.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends


    If you entitle shareholders to dividends BEFORE the year end then you would Dr Dividends (Inc St) and Cr Dividends payable (B/S). Because they are likely to be paid to shareholders within one year then you show them along side Trade Payables within the top half of the B/S under current liabilities.

    BUT watch out for the red herrings. If they state that dividends will be £xxx after the year end date, then DO NOT introduce this as a liability - add it too the accounts as a note because it is a none ajusting event. Also if dividends are in the Trial Balance and not in the additional notes then it is more than likely that the double entry has been made allready and all you need to do is wack the figure into the Staement of Changes in Equity which automatically lowers the retained earnings in the lower part of the B/S.

    Does this help??

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    In the amended June 05 paper on the AAT website there are the following in the TB:

    Final dividend paid for y/e 31 March 2005 £1,000
    Interim dividend paid for y/e 31 March 2006 £600

    Neither of them appear on the income statement. Both are deducted in the retained earnings at the bottom of the BS.

    So does everyone agree that no dividens will apear on the income statement?

    I'm starting to get confused now. I thought I was ok with this :(
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    Cheers.

    Every exam is the same, you think everything is covered then you have a doubt about something.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    So in what situation would I put a dividends figure on the income statement?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    As far as my understanding goes, under no circumstances do Dividend appear in the income statement. Dividend is always in the statment of change in equity.

    Am I wrong ?

    Stella
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    From what I can see from the specimen paper I'm in agreement with that.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    There were no dividends at all???????????????????and we all revised these so hard
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Quick Advice..........Dividends

    Bet it appears in Decembers paper though!! Hopefully, we'll never need to know :D

Categories

Privacy Policy