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hi, Mike
could you please kindly remind me the algorithm of calculating the dividends paid? I remember, we’ve analysed it somewhere, but can’t find it at the moment :((
if I’m not mistaken, it’s the difference between bank balance and… ?Ah – in a preparation of financial statements question where you are given two statements of financial position and a statement of profit or loss
The movement in the balance of Retained Earnings in the statement of financial position is accounted for by this year’s retained earnings. But if the company has paid a dividend, that won’t show on the statement of profit or loss – it’s not an expense, it’s an appropriation of profits
Say we have retained earnings brought forward and carried forward of 60,000 and 70,000 respectively and the profit after tax is shown as 12,000
60,000 + 12,000 should equal the retained earnings carried forward, but it doesn’t in this example. There MUST have been a 2,000 dividend paid
60,000 + 12,000 – (2,000) = 70,000
Ok?
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