On 1 April 20X1 the Directors of Davo Ltd Resolved

question 3

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:
$$\begin{array} { l r } &\$\\\text { Issued share capital (1 } 1000000 \text { shares) } & 2000000 \\\text { Retained profits } & 3800000 \\\text { Asset revaluation reserve } & 955000 \\\text { General reserve } & \underline{445000} \\\text { Total } & 7200000\end{array}$$
-How would you calculate the balance of retained profits at 30 June 20X1?

• A)$3 800 000 less $350 000
• B)$3 800 000 plus profits for April, May and June 20X1 less $350 000
• C)$3 800 000 plus profits for April, May and June 20X1 less $700 000
• D)$3 800 000 less $700 000

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