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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??

 5 Replies

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)   (1091 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

 

Net balance of P&L

Op. balance in P&L

150,000

Carried forward current year profit

            168,000

Net balance in P&L

318,000

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

Without distributing the basic dividend, from where comes the distribution of additional dividend??

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