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F7 Chapter 19 Questions

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  1. Sir, in question 1, I understand the part where dividends of 2014= 3800 + Current dividends paid 2900, But then there is a balance payable of 4600, Why don’t we deduct the closing balance?

    • The question asks you “How much was paid?”

      And the answer is …

      … Pear paid the brought forward liability from last year and also paid an interim dividend this year

      So dividends PAID were $3,800 and $2,900 = $6,700

      You ask “Why don’t we deduct the closing balance?”

      Why should we? And HOW should we?

      We haven’t added it in anywhere from which we could now deduct it

  2. No, we’ve added interim dividend to BROUGHT forward amount and in that respect it is the same as tax and interest

    The big difference is that dividends are not debited to statement of profit or loss

    • There were 320,000 shares in issue at the start of the year

      A 1 for 8 bonus issue took the share numbers up to 360,000

      A 1 for 2 rights issue involves the issue of a further 180,000 shares at an exercise price of 90 cents raising $162,000

      (The question should read “financing activities” not “operating activities”)

      • Sir, why is it different from the way interest or tax payment?

        wherein, (Amount brought forward+finance cost as per SPorL minus amount carried forward= interest paid during the year)

        in case of dividend, we have added interim dividend paid to carried forward amount

        Thanks

      • “Sir, why is it different from the way interest or tax payment?

        wherein, (Amount brought forward+finance cost as per SPorL minus amount carried forward= interest paid during the year)

        in case of dividend, we have added interim dividend paid to carried forward amount

        Thanks”

        I’ve already answered this somewhere else!

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