How are dividends in arrears presented in the financial statements?

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Jenkins 0 Comments

How should I present the dividends that are not paid yet (in arrears) on the balance sheet? How is the treatment different if the dividends relate to redeemable or irredeemable preference shares?

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score 0 · Answer 1 · 2012-12-02T21:55:36+00:00

When a dividend is declared or in the case of the preferred dividends when a dividend is accumulated (not paid in the year), the company will recognize a current liability (assuming that the dividends are declared in the case of the preferred dividends). The double entry is the following:

Debit Retained Earnings
Credit Dividends Payable