Fundamental accounting

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 November 2011 Following are the informations related to the Great Ltd:
1) Equity share capital paid up Rs. 2,85,000.
2) call in advance Rs. 10,000.
3) call in arrears Rs. 15,000. and
4) proposed dividend 20 percent. the amount of dividend payable by the Great Ltd. will be?

OPTIONS:
(a) 57,000.
(b) 59,000.
(c) 60,000.
(d) 58,000.

Please verify your answer.
Regards,,,

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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16 November 2011 Shareholders are given interest on calls in advance and this amount is just loan to company before the date, when amount of call is payable by shareholder. At that time calls in advance will be adjusted with payable amount of calls. From that date it will be included in paid up capital. So no dividend is payable on calls in advance, but interest is payable.

In case of calls in arrears it is not the part of paid up capital. It means that it is the amount which company has demanded but not yet received. So, it is like debt to shareholder and instead the company has right to get 5% annual interest on this amount from shareholder. No dividend is payable on calls in arrears.

Hence pay dividend on 285000 @ 20%

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