Question

How are dividends and dividends payable reported in the financial statements prepared at december 31

Answer 1

1. Dividends are deducted from the Statement of Retained Earnings as dividend expenses.

2. Dividends payable are reported in the Balance Sheet as current liabilities.

Step-by-step explanation:

Dividends are distributions to the shareholders from earnings (income) after all expenses and taxes have been deducted from the revenue for the period. Dividends payable are unpaid dividends, which are reported as current liabilities until they are paid for in the next accounting period.