Question

he following data relates to ABC Ltd: • Profit for the year ended 30 June 20X1, $500,000. • On 31 March 20X1, the directors decided to pay an interim cash dividend of $100,000. • On 7 April 20X1, the interim dividend was paid. • For final dividends, the company’s constitution provides that the directors can recommend a dividend to be subsequently declared by a resolution of the members in a general meeting. • The directors recommended a final dividend of $250,000 to be paid. • The shareholders accepted the final dividend at the annual general meeting, and payment was made on 14 September 20X1. Required:

(a) Prepare journal entries to record the above dividend payments.

(b) Prepare the retained profits general ledger account.

pls i need the question b in more simpler form so that it's easy to understand.

Answer 1

Answer to Question a):

Date	Account Title & Explanation	Debit($)	Credit($)
7-4-20X1	Interim Dividend A/c	100000
	To, Bank		100000
	(Being interm dividend paid)
30-6-20X1	Retained Earning A/c	100000
	To, Interim Dividend		100000
	(Being Interim Dividend account closed at year end)
14-9-20X1	Retained Earning A/c	250000
	To, Dividend Payable		250000
	(Being Final dividend declared by member at Annual General Meeting)
14-9-20X1	Dividend Payable A/c	250000
	To, Bank		250000
	(Being Final Dividend paid at Annual General Meeting)

Answer to Question b):

		Retained Earnings A/c
	Dr.				Cr.
Date	Particulars	Amount($)	Date	Particulars	Amount($)
30-6-20X1	To, Interim Dividend	100000	30-6-20X1	By Income Summary	500000
30-6-20X1	To, bal c/d	400000
	Total	500000		Total	500000
			1-7-20X1	By, bal b/d	400000
14-9-20X1	To, Dividend Payable	250000
30-6-20X2	To, bal c/d	150000
	Total	400000		Total	400000