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Unformatted text preview: Dividends Dr Cr Dr Cr Dr Cr Cr Interim Dividends (-ve OE) Bank (A) ( Interim Dividends Paid) Final Dividends (-ve OE) Bank (A) ( Final Dividends Paid) Retained Earn ings (OE) Interim Dividends (OE) Final Dividends (OE) ( Closing Entry – Dividends) Closing Entry Accounting Treatment for Accounting Treatment for Dividend Distributions (Cont)
Where a final dividend is announced before the balance date, the dividend becomes a liability, therefore Dr Final Dividends (OE) Cr Dividends Payable (L) Generally the dividend is announced post balance date, disclosed in the notes to the financial statements and paid in the new period Share Splits Share Splits ‘Split’ the number of current shares Retain the total amount of equity Reduce the average share ‘value’ Often done to increase marketability of shares Sometimes done to facilitate change in ownership percentages Bonus Issues Bonus Issues
Bonus issues are share issues made as a noncash distribution (therefore no solvency test) Normally used to indicate future earning potential Accounting for Bonus Accounting for Bonus Issues
When bonus issue made from general equity no entry required Generally bonus issue made from reserves therefore Dr Reserves Cr Contributed Capital Dividend Electio...
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This note was uploaded on 12/23/2009 for the course BCOM ACIS 211 taught by Professor Susanwild during the Spring '09 term at Canterbury.
- Spring '09