[foong]

Wat Is the entry for dividend declared and paid at current yr that include previous retained earning.Is it show the entry in Balance Sheet or Income statement.

[morgaine300]

A dividend declared can be done two ways:

Dr. Dividend OR Retained Earnings
Cr. Dividend Payable

If you debit Dividends, then it is closed to the retained earnings account at year-end. Either way, it ends up coming out of retained earnings in the long-run.

When it's paid, it's like paying any other payable:
Dr. Dividend Payable
Cr. Cash

Dividends are never declared and paid on the same date. But if this is for homework, they possibly might do that cause they're cheating. In which case, the original entry is a cr to cash and no other entry would be done.

I don't know what "includes previous retained earnings" means. Even if you credit directly out of retained earnings, that's not about "including" it. I don't understand that statement.

As for the financial statements, I think that depends on where you are. I've seen on here other countries actually showing the net income and dividends directly on the balance sheet, but we do not do that here. Either way, it's certainly not on the income statement, because that is only revenues and expenses.

[foong]

But the Dr Dividend/Retained Earning Account is it in Income Statement or Balance Sheet... cause I don't know whether ned to show the divided declared in current yr Income statement... Thks .

[rehmanvohra]

but the Dr Dividend/Retained Earning Account is it in Income Statement or Balance Sheet...cause i dunno whether ned to show the divided declared in current yr Income statement ....Thks .

Dividends are appropriation of profits and are reported in the Statement of Changes in Equity as per IAS 1 (Revised). Previously, it was usual to prepare a retained earnings section as follows:

Balance at beginning of the year xxx
Net income for the year per income statement xxx
Less: Appropriations
Dividends ---------------------------- xxx
Balance at year end ---------------- xxx

There may be other appropriations such as:
Transfer to general reserve
Transfer to dividends equalization reserve
Stock dividends payable, etc