how we get 186000 ( I red underlined it below ) what numbers we calculated to get 186000 ? where and how exactly it came from ? show me the numbers
Refrence
Deegan. (2016). Financial Accounting . McGraw-Hill Education, Australia
The query is regarding the entry J pertaining to
dividends.
Kindly observe the detailed reconciliation of opening and closing
retained earnings. We can observe of Mungo Ltd, a item called
'Dividends Received from Barry Ltd $ 186,000'(below gross profit).
Also in case of Barry Ltd 'Dividends Paid $ 186000'.
Given that Mungo Ltd owns 100% in Barry Ltd. Hence all dividends Barry Ltd declared will be paid to Mungo Ltd. In other words, all of the dividends of Barry Ltd is received by Mungo Ltd.
The journal entries for ,
A. Payment of dividend in books of Barry Ltd is:
Dividend Paid a/c Dr | 186000 | |
To Bank a/c | 186000 |
Receipt of dividend by Mungo Ltd is:
Bank a/c Dr | 186000 | |
To Dividend Revenue a/c | 186000 |
So while we consolidate statements we need to eliminate all
intercompany transactions. Accordingly we pass reverse entries for
the above.
Hence Dividend Revenue account is to be debited and Dividend paid
is to be credited.
The entry is:
Dividend Revenue a/c Dr | 186000 | |
To Dividend Paid a/c | 186000 |
Hope this will help. Do comment in case of any query regarding this solution.
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