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Treatment for dividend payment

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NAVEEN KUMAR ANDHAVARAPU

FINANCE

96 Points Posted on 31 January 2012

If we make the devided(belongs to previous year) payment more than the provision created in previous year due to shares allotted between board meeting and AGM,

then how can we accounting the excess dividend?? Is it debited to dividend provisiion(liability) or debited to divided paid (expenses) in current year books?? Or debited to in any other account??

Replies (1)

Giridhar S Karandikar

Team Lead

7558 Points Posted on 31 January 2012

The register of members is required to be closed before providing for dividend for the year & provision for Proposed Dividend is made accordingly. If after serving the notice of AGM & before closing the register of members there is any change in the shareholding then it has to be taken care of accordingly.

Hence I don’t think that there should be any shortfall towards dividend provided & dividend actually paid by the co. While providing for dividend P&L Appropriation should be debited & Proposed dividend should be credited & in the subsequent year when dividend is declared proposed dividend shud be debited & Bank should be credited to make the payment.