IAI Actuarial Core Principles · Business Finance · Interpreting company accounting information
Mehta Foods Ltd had opening retained earnings of Rs 120 lakh and closing Rs 150 lakh. Profit after tax was Rs 55 lakh. Share capital and borrowings were unchanged. Opening and closing dividend payable balances were Rs 6 lakh and Rs 10 lakh. Dividend declared is charged to retained earnings. What cash dividend was paid during the year?
Cash dividend paid was Rs 21 lakh. Declared dividend is 120 plus 55 minus 150, which is Rs 25 lakh, and since the dividend payable rose by Rs 4 lakh, that portion was not yet paid in cash.
- ARs 21 lakhCorrect
- BRs 25 lakh
- CRs 29 lakh
- DRs 30 lakh
- Rs 19 lakh
Explanation
Dividend declared = 120 + 55 - 150 = 25. Payable rose by 4, so cash paid = 25 - 4 = 21. Rs 25 lakh ignores the payable, and 29 adds the increase wrongly.
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