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Dear Tutor
at F= question 8, Dexon the dividend paid (15 500 dollars) is added to the draft retained profit, I thought:
debit retained earnings 15 500
credit dividend payable (LIAB) 15 500that is exactly the other way around
Thanks
A dividend is an appropriation of profits, it’s not an expense. In our draft profit we have treated the dividend as an expense in arriving at the profit figure.
This is an incorrect treatment and the 15,500 should therefore be added back to the draft profit figure.
It should correctly be shown as an appropriation and disclosed as a deduction within the Retained Earnings column of the Statement of Changes in Equity
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