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The Bal sheet of a ltd. company as at 31 Dec 2007 and 2008 showed proposed dividends declared before the year end of 50000 and 55000 respectively. The statement of changes in equity for the year ended Dec 2008 showed dividends of 100000.
How much should be shown in the statement of cash flows for Dec 2008 for dividends paid ?A company has an under provision of 5000 on its tax liability account at the year end of Dec 2008 before accounting for that year’s tax charge. Estimated tax on profit for the year is 83000. What amounts should be shown in income statement & bal sheet for year 2008, regarding tax ?
(Although I will answer both questions, please start new threads if they are questions on different topics in future.)
First question:
Because they had declared a dividend of 50,000 at the end of 2007, this will have been paid during 2008.
This years dividends are 100,000, but 55,000 of them have not been paid and are still owing – which leaves 45,000.
So the total actually paid this year (for the statement of cash flows) will be 50,000 + 45,000 = 95,000.Second question:
In the statement of profit or loss will be 83,000 + 5,000 = 88,000
In the statement of financial position will be 83,000 liability.
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