On 1 April 20X1 the Directors of Davo Ltd Resolved

question 2

Multiple Choice

On 1 April 20X1 the directors of Davo Ltd resolved to pay shareholders an interim cash dividend of $0.35 per share on 1 May 20X1.Davo Ltd's financial year end is 30 June.Davo Ltd prepares monthly accounts.At 31 March 20X1, the equity section of Davo Ltd's balance sheet is as follows:
$$\begin{array} { l r } &\$\\\text { Issued share capital (1 } 1000000 \text { shares) } & 2000000 \\\text { Retained profits } & 3800000 \\\text { Asset revaluation reserve } & 955000 \\\text { General reserve } & \underline{445000} \\\text { Total } & 7200000\end{array}$$
-Show the format of the journal entry in the accounts for the month of April 20X1

• A) \(\begin{array}{llcc}
• \text { Accounts} & \text { Debit \$} & \text { Credit \$} \\
• \text { Interim dividend } &X\\
• \text { Interim dividend payable } &&X\\
• \text { } &\\
• \text { } &\\
• \text { } &\\
• \end{array}\)
• B) \(\begin{array}{lcc}
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Interim dividend } & x & \\
• \text { Bank } & & x
• \end{array}\)
• C) \(\begin{array} { l c c }
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Interim dividend payable } & \mathrm { x } & \\
• \text { Interim dividend } & & \mathrm { x }
• \end{array}\)
• D) \(\begin{array}{lcc}
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Retained profits} & x & \\
• \text { Bank } & & x
• \end{array}\)

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