ACCOUNTING FOR DIVIDEND AND DIVIDEND DISTRIBUTION TAX



ACCOUNTING FOR DIVIDEND


Dividend is share of profit after tax given to shareholders (owners) of the company, it is appropriation of profit after tax not an expense . It is clearly explained in the below table:

Particular
Amount
Net Profit
1000000
Less:- Income Tax
 300000
Net profit after tax
 700000
Appropriation:-
Dividend
Amount transferred to general Reserve

 100000

600000

  Journal for dividend

SL.NO
PARTICULAR
DEBIT
CREDIT
1
Dividend A/c      Dr
         To Shareholders  A/c
100000

100000

 Rules for passing journal entry

 Debit
 Dividend is appropriation from profit and the same is paid to shareholders as  there is outflow of funds and it is deemed to be expense and the same is  debited

 Credit
 Shareholders are the receiver of dividend and they are deemed to be creditor

Computation of dividend distribution tax

DDT


FOR DDT CALCULATOR CLICK HERE


 Journal for  Dividend Distribution Tax (DDT)

SL.NO
PARTICULAR
DEBIT
CREDIT
1
DDT A/c      Dr
         To DDT payable  A/c
20357.46

20357.46

 Rules for passing journal entry

Debit
Dividend distribution tax is expense so it is debited

Credit
DDT is payable to government and the account is credited to DDT payable

Journal for transfer of dividend and DDT to profit and loss appropriation account

SL.NO
PARTICULAR
DEBIT
CREDIT
1
Profit and loss  A/c      Dr
         To dividend  A/c
         To DDT A/c    
120357.64

100000
20357.64

 Rules for passing journal entry

Debit
Since dividend is appropriated from profit and loss, the account has to be debited as there is decrease in the account

Credit
Dividend account is closed by transfer to profit and loss account by crediting the account,DDT is transferred to profit loss account by crediting

Journal for payment of dividend and DDT

SL.NO
PARTICULAR
DEBIT
CREDIT
1
Shareholders  A/c      Dr
DDT payable A/C       Dr
         To Bank A/c
100000
20357.64


120357.64

 Rules for passing journal entry

Debit
Share holder account is closed by debiting their account, because they are paid.
DDT payable account is closed by debiting the account, because they are paid.

Credit

Since there is outflow of money which is an asset the bank is credited.

Comments

  1. UnknownNovember 13, 2020 at 12:39 PM

    the information you have updated is very good and useful, please update further.
    if you require any info regarding TAX & GSTR please visit

    Digital Signature Services in bangalore|
    Tax consultants in bangalore|
    Trademark Registration in Bangalore|
    Consultants in Bangalore|
    GST Training Institutes in Bangalore
    Income Tax Consultants in Bangalore|
    Auditors For IT in Bangalore|
    Import Export Consultants in Bangalore|
    SSI Registration in Bangalore

    ReplyDelete
  2. HemapriyaDecember 4, 2020 at 7:13 PM



    Thanks for sharing your valuable information. Reach us to know more about Trademark Registration Services in Chennai at the best price

    ReplyDelete
  3. BryantApril 15, 2021 at 7:45 PM

    I love reading to improve my knowledge and this kind of blogs helps me to do so, Thanks.I really appreciate your work.If you require about new company registration delhi | one person company registration in delhi please click on it.

    ReplyDelete
  4. un knownSeptember 24, 2021 at 6:12 PM

    Hello I am so delighted I located your blog, I really located you by mistake, while I was watching on google for something else, Anyways I am here now and could just like to say thank for a tremendous post and a all round entertaining website. Please do keep up the great work. Best cpa near me

    ReplyDelete

Post a Comment

Popular posts from this blog

AMALGAMATION :- JOURNAL ENTRIES IN THE BOOKS OF TRANSFEROR AND TRANSFEREE COMPANY

ACCOUNTING FOR AMALGAMATION PART-II Amalgamation means the liquidation of one or more companies and transfer of business of liquidated entities to another entity. There may be amalgamation either transfer of two or more undertakings to an existing company or new company. In the part -1 CLICK HERE FOR PART - I  Accounting for amalgamation we learnt about nature of amalgamation and method of accounting, now we are going to learn journal entries in the event of amalgamation. JOURNAL ENTRIES IN BOOKS OF TRANSFEROR COMPANY AND TRANSFEREE COMPANY IN THE BOOKS OF TRANSFEROR COMPANY(SELLING COMPANY) Accounting standard 14 is not applicable for selling company. Accounting is done with the objective of closing books of accounts and simultaneous determination of profit or loss on closing books of accounts.
CONTINUE READING »

FINANCIAL STATEMENTS AS PER NEW SCHEDULE III ,COMPANY ACT 2013 (BALANCE SHEET AND STATEMENT OF PROFIT AND LOSS)

Image
THE COMPANIES ACT 2013: SCHEDULE III The presentation of financial statements of companies registered under the companies Acts is now governed by schedule III of companies Act 2013.The format is same as per schedule VI of the companies Act 1956. Identifiable difference from previous format only one format has been prescribed in earlier there were two alternatives formats. PROFIT AND LOSS ACCOUNT was renamed as STATEMENT OF PROFIT AND LOSS. The 'liabilities' side stand was renamed as "Equity and Liabilities" In the statement of profit and loss, the threshold level for disclosure of expenditure items has increased from Rs. 5,000 to Rs. 1,00,000. remaining changes are very minute.  FOLLOWING IS THE FORMAT OF BALANCE SHEET AS PER SCHEDULE III
CONTINUE READING »

JOURNAL ENTRY FOR FIXED DEPOSIT( INCLUDING INTEREST AND MATURITY)

Journal Entry for Fixed Deposit Fixed deposit Rs. 100000/- was deposited in SB BANK                    Fixed Deposit A/C             Dr      100000                              To SB BankA/C                                         100000   (Being fixed deposit was done in SB) Rules for passing Journal entry Debit Fixed deposits are treated as non-current asset or current asset is depended on maturity period, if maturity period is less than one year from the date of reporting it is treated as current asset or else treated as non-current asset. As per Real account rule (Fixed Deposit) "debit what comes into business"(Asset) Credit There are is outflow of cash from business and it has to be decreased by crediting the bank account. As per Real account rule (Bank) "Credit what goes out of business"(Asset)
CONTINUE READING »