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1.sir the double entry for dividend payable for redeemable preference shares journal entry is,
dr Finance cost
cr dividend payable.
but what will be the credit entry if dividend is paid. ?whether it is paid or payable we adjust in SOCI and if it is payable we adjust in Current liability in SOFP. but if it is paid, where does it go in SOFP?
again, in SOFP under equity do we deduct redeemable preference dividend from retained earnings?
for irredeemable what is the journal entry for dividend paid?
dr retained earning
cr ?where do dividend paid go in SOFP?
does dividend paid get deducted from retained earning in equity?
1. When the dividend is paid, Dr dividend payable Cr Cash
2. Dividends on redeemable preference shares are not shown separately in the SOCE – they reduce the profit for the year.
3. The SOFP shows the assets and liabilities. If a dividend has been paid then it does not appear in the SOFP.
4. Dividends on redeemable preference shares reduce profit (and therefore automatically have reduced retained earnings)
1. If an irredeemable dividend is paid, then Cr Cash Dr Retained earnings (and disclose it separately in the SOCE).
2. Dividends paid are not shown in the SOFP – if they have been paid there is no asset and no liability
3. All dividends end up reducing the figure for retained earnings.
John sir,when a rights issue is made dividends would increase.so will the retained earnings reduce?
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