How proposed dividend ac is made when dividend made is given in the adjustment even if the amount of past and current year is given in the balance sheet? Plz explain with the journal entry

Dear Student

If Dividend made is given then it means that dividend income received, therefore it won't affect proposed dividend account.

This dividend made would be shown as income in investing activity and shall be shown as deduction from net profit before tax and extraordinary item.

Now with regards to proposed dividend it would be prepared in the same way as prepared i.e :
Opening balance of proposed dividend is paid from bank and closing balance of proposed dividend is charged from profit and loss account.


Suppose in Balance sheet Proposed dividend is shown as :
Particulars  Current Year   Last Year 
Proposed Dividend             100,000           50,000

  and  in  adjustment, it is shown as :
1. Dividend made (Received) during the current year is Rs 10,000/-

Therefore journal entry that would have been passed considering the above facts in mind are :
Journal in the books Current Year
Date Particulars    Debit   Credit 
  Proposed Dividend A/c Dr.               50,000  
    To Bank A/c                   50,000
  (Being Dividend declared for last year paid in current year)      
  Profit and Loss A/c Dr.            100,000  
    To Proposed Dividend A/c                100,000
  (Being dividend proposed for Current Year, it shall be paid on approval form shareholders)      
  Entry for Dividend appearing in adjustment i.e Dividend made(Received))      
  Bank A/c Dr.               10,000  
    To Dividend Income A/c                   10,000
  (Being dividend received)      
  Dividend Income A/c Dr.               10,000  
    To Profit and Loss A/c                   10,000
  (Being income credited to profit and loss account)      


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Proposed dividend is a provision , so when it is made entry would be ~ { P&l....dr. To proposed dividend } and this dividend would be paid then the entry would be { proposed dividend ....dr. To cash }
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