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Girish S Khanvilkar (Querist)
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13 June 2015 On 01-04-2005, 5% cumulative preferance share capital is Rs.2,00,000
equity share capital is rs.5,00,000
During the years 2004-05 and 2005-06 the dividend declarations totaled rs.8,000 and Rs.16,000 respectively. what is the amount of dividend paid to equity shareholders for year 2005-06 ?

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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14 June 2015 Annual preference dividend = 5% x Rs.2,00,000 = Rs.10,000
Dividend paid in 2004-05 = Rs.8,000. Therefore, only pref. dividend was paid in this year and that too partially. Arrears of pref. divided will be Rs.2,000 and that will have to be paid in subsequent years.
Dividend paid in 2005-06 = Rs.16,000. Of this Rs.2,000 will be arrears of Pref. dividend of 2004-05 + Rs.10,000 pref. dividend of 2005-06 i.e. total pref. dividend of Rs.12,000.
Equity dividend in 2005-06 = 16,000 - 12,000 = Rs.4,000

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