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Extract of PNL for the year ended april 2007:
Profit for the year 36000
In addition to the profit above.
(1) Company paid dividends of 21000$ during the year
(2) A gain on revaluation of land resulted in a surplus of 18000 in the revaluation reserves
What amount will be added to retained earnings at the end of the financial year?
My answer was 36000 -21000 + 18000. Is it correct?
Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers.
Your answer is not correct. The amount added to the retained earnings will be the profit of 36,000 less the dividend of 21,000.
The revaluation surplus will not be added to retained earnings, but will go to the revaluation reserve.
The is all explained in my free lectures on limited companies. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.