The present case is as follows:
The directors have proposed a dividend of say Rs. X and the accounts are signed by the management and the auditors have also issued their opinion on the same and signed it.
The same has been circulated to the shareholders but the SH have not approved the dividend.
The question here is :
What accounting entry will be passed in respect of the proposed dividend in the next year?
There will be no entries required in the current year is my opinion.
no i think if proposed dividend has been disapproved by shareholders u must pass the entry to remove it from b/s(assuming entry must have been passed of prop.dividend in last year)
why liab.is standing in b/s which is no longer exist now...........
No, i am disagree with Madhur. It can not be removed from the Balance Sheet of Last year.
When dividend is proposed, its provision is made in the accounts and after its declaration in AGM actual payment is made from the accounts. Thus, in case the dividend is not declared there was no transaction involved and only there is provision. Thus, after the date of AGM provision should be reversed.
And if will affect next year balance sheet.
i do agree with u mr.ankur
i didnt state anywhere that it should have been removed from last year's b/s
it should be reversed in current year
may be it happened due to misinterpretation.........m sorry for that if i wrote anything wrong earlier
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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