Ipcc accounts paper

shreya (student) (67 Points)

28 May 2014

What does 20% dividend on equity shares mean?? Is it 20% of equity share capital or the profit??

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Harish (Student CA IPC / IPCC) (78 Points)
Replied 28 May 2014

on capital

sakshi (student) (57 Points)
Replied 28 May 2014

yes it is 20 % dividend on 7500000 (esc) but dividend found is 15 lakh and profit is 15 lakh. i think the question was wrong

shreya (student) (67 Points)
Replied 28 May 2014

Sure na?? I also computed on capital only but found the profit insufficient so I was a little worried..

N.Naveena Maheswara Rao (Assistant manager for accounts) (1096 Points)
Replied 28 May 2014

On cpaital only. you will get insufficient profits. SO we need not pay equity dividend in case of insuffieient profits. Below is the suggested answer

Current year Profit	1,000,000
Less: Depreciation	37,500
Tax provision	120,000
Balance available for appropriations	842,500
Less: Transfer to reserve (842,500 * 25%)	210,625
Staff bonus provision (75,000 X 100 X 20% X 10%)	150,000
Balance available for distribution of dividend	481,875
Less: Preference dividend (12,000 X 100 X 15%)	180,000
Balance	301,875
Less: Carried forward profit (12,000 X 100 X 14%)	168,000
Balance for additional dividend	133,875

Distribution of additional dividend
Balance for additional dividend	133,875
To preference share holders (1/3)	44,625
To equity share holders (2/3)	89,250