Ask Experts Questions for FREE Help !
Ask
    chris0298's Avatar
    chris0298 Posts: 6, Reputation: 1
    New Member
    		  
    #1

    Jul 12, 2009, 07:07 PM
    Dividend payout
    Hi all,

    Should dividend be paid out from the retained earnings? Should it be paid out from the earning of current year and pay out in the middle of the year? (i.e. current year's earnings is not yet in the retained earnings account)
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
    		  
    #2

    Jul 12, 2009, 11:21 PM

    Dividend should be paid from retained earnings. It is not paid from net income for the year but after transferring net income for the year to retained earnings then you can pay dividend. The entry will be
    Dr. Retained earnings
    Cr. Cash
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #3

    Jul 13, 2009, 04:25 AM

    Dividends can be paid only from the profits that are available for distribution. It is permissible to pay dividends in the current year provided there is sufficient balance in the retained earnings.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

How do I find dividend payout [ 2 Answers ]

I know what the capital budget is, the net income and the percent of debt and equity. How do I use these numbers to find the dividend payout?

Dividend Payout ratio [ 1 Answers ]

How do you determine a dividend payout ratio?

Dividend Payout [ 1 Answers ]

I was given an annual report and asked to comment on any visible trends in dividends paid and dividend payout ratio. I know the dividend payout ratio is dividends per common share / diluted earnings per share. The diluted earnings per share are stated on the income statement, but where do I find...

View more questions Search