Mamagau Limited acquired 50% of the voting shares of Mashego Limited at 30 April 2015 at R160 000. The balance sheet of Mashego Limited showed the following balances at 30 April 2015:
Non-current assets R450 000
Current assets R120 000
Non-current liabilities R240 000
Current liabilities R25 000
The year-end date for Mamagau Limited is on 30 April of every year. During the year ended 30 April 2016 Mashego Limited reported an after tax profit of R120 000. The directors of Mashego Limited declared an ordinary dividend of R20 000 but not yet paid at reporting date. Mamagau Limited applies equity accounting method for its associates and joint ventures.
What is the correct journal to record the dividend declared as at 30 April 2016in the books of Mamagau Limited?
The correct journal entry to record the dividend declared as at 30 April 2016 in the books of Mamagau Limited would be:
Dividend Receivable Dr. R20,000
Dividend Income Cr. R20,000