Retained earnings — OpenTuition Forums

RRobert11y ago

Hi mike, From bpp work book P acquired s on 1 jan when R.E was 190. The re on 31 dec as per question was 240. However in the p&l in the question the after tax profit was 55. Can this be right, or should the difference between the two R.E figures equal the profit after tax? There were no unrecorded transactions as it was a very basic question Thank you

MikeLittleTutor11y ago#1

Surely it means that the subsidiary has paid a dividend of 5 Does that fit?

RRobert11y ago#2

No mention of dividends in the question...very strange indeed Thanks for your response

MikeLittleTutor11y ago#3

By how much has retained earnings moved since last year? If that amount is not the same as the figure at the end of the statement of profit or loss, then a dividend has been paid! You need to watch out for that when preparing an answer to a cash flow question!

RRobert11y ago#4

Thanks Mike

MikeLittleTutor11y ago#5

You're welcome