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Doubt

ipcc aspirant (Student CA IPC / IPCC) (49 Points)

13 August 2014

If interim dividend paid is Rs 9000

proposed final dividend - 10%

paid up share capital Rs200,000

then how much proposed dividend is to be shown in the balancesheet under short term provisions??

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4 Replies

Sabin Pokharel (student) (176 Points)
Replied 13 August 2014

Propposed dividend to be shown as (20000-9000) = 11000 in profit and loss account , similarly same amount will be shown under current liabilities and provision in Balance Sheet.

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ipcc aspirant (Student CA IPC / IPCC) (49 Points)
Replied 13 August 2014

@ sabin thank u very much for presenting your views to my problem

But proposed dividend is liability and is to be shown under short term provision only not in p&L a/c.

In solution it is done like that

PD= 7.5% of paid up capital Rs2,00,000=Rs15,000

How this treatment is done can anyone from forum please explain me.

Sabin Pokharel (student) (176 Points)
Replied 13 August 2014

If so then can you tell me the treatment of outstanding salary?

Liability doesn't mean it should come in Balance sheet only - it can appear in income statement also, otherwise you are ignoring double entry system or accrual basis.

Here, saying profit and loss account, I am also refering profit and loss appropriation account.

Analyse this:

Treatment of outstanding expenses :

Since expenses has already incurred , as per accrual basis it should be debited to profit and loss account. Similarly, being outstanding expenses, that mean to say expenses made but not yet paid, more precisely, liability, it should come under liabilities side also. (You can see impact of double entry system also.)