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Cracker, a company, has share capital as follows:
ordinary share capital (50c shares) $200000
8% irredeemable preference share capital $50000The company pays an interim dividend of 12.5c per share to its ordinary shareholders and pays the preference shareholders their fixed dividend. Before the year end the company declares a final dividend of 36.5c to its ordinary shareholders.
Calculate the amounts shown in statement of changes in equity (SOCIE) and statement of financial position (SFP) in relation to dividends.
A. SOCIE: $200000 SFP: $150000
B SOCIE: $54000 SFP; nil
C. SOCIE: $200000 SFP:$146000
D. SOCIE: $101000 SFP: $72000I have calculated the dividend preference shares: 8% x $50000= $4000, interim dividend of ordinary share: 12.5c x 400000 shares= $50000, and final dividend :36.5c x 400000=$146000
however i am confused to where it should be recorded in the financial statement.
I would be glad if you can help me, SIr.
You must have an answer to this in the same book in which you found the question, and so you should ask about whatever it is in the answer that you are not clear about.
Ordinary dividends are only recorded when they are actually paid, and so the final dividend is of no relevance.
Therefore it is simply the dividends paid during the year that appear in the SOCE, and nothing appears in the SOFP.
This is explained in my free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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