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October 23, 2017 at 4:49 pm
Thanks for the lecture and it was very useful. i have a question on dividends section of the lecture. as you mentioned in the tutorial also proposed dividends is not appear in the SOFP.
but as per my understanding proposed dividends should be recorded as current liability (cash dividends payable) for the relevant year debiting proposed cash/stock Dividends account.
and once it paid off, payable account DR and cash book Cr.
finally we need to close the cash dividend account for that Retained Earning a/c Dr and cash dividend a/c dr.
could you please explain me why there you mentioned it is not coming for the SOFP.
John Moffat says
October 24, 2017 at 8:06 am
If a dividend has been declared but not yet paid, then yes – it is recorded.
However if it is simply been proposed then it is not yet certain (in theory it could be voted down by the shareholders) and it is not recorded until it does become certain.
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