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Sorry i asked in the wrong forum before!
How do we account for the dividend paid in what statements?
Secondly, do we include all the equity or capital in statement of changes in equity and how does dividend settles there?
Is this the correct double entry:
DR Dividend
CR CashDividend is paid from the retained earning by reduce from SOFP.
When dividends are paid, the entry is indeed CR Cash and DR Dividends.
Dividends to not appear in the SOPL. The appear in the SOCE as a reduction in the retained earnings. The retained earnings appear in the SOFP.
This is all explained in the free lectures working through Chapter 13 of our free lecture notes. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
When dividend is paid – this would be first entry:
Dr Dividend expense
Cr CashYou said in one forum that we should make this entry at the end of the year but why do we need this one? (see below)
At the end of the year – this would be last entry:
Dr Retained earnings
Cr Dividend expenseSecondly, I watched your lecture on SOCE but I assume that we include all the equity (or capital) balances in SOCE where profit for the year, drawings and dividends paid all include in the retained earnings. True?
Thirdly, if we received dividend as income then we make only one entry:
DR Cash
CR Dividend incomeThanks of your answers 🙂
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