Marvin holds 10% of the common shares of Pink Limited. For the 2017 fiscal year end, all shareholders received a cash payment to represent their share in the net income of Pink Limited. How would this cash payment be reported in the equity section of Pink Limited’s financial statements?
A. as a reduction in the Owner’s Equity account
B. as an owner withdrawal, reducing Shareholder’s Equity of Pink Limited
C. as a dividend, reducing Shareholder’s Equity of Pink Limited
D. This payment would not impact the equity section of the financial statements.
Answer:C
Marvin holds 10% of the common shares of Pink Limited. For the 2017 fiscal year end, all shareholders received a cash payment to represent their share in the net income of Pink Limited. How would this cash payment be reported in the equity section of Pink Limited’s financial statements?
A. as a reduction in the Owner’s Equity account B. as an owner withdrawal, reducing Shareholder’s Equity of Pink Limited C. as a dividend, reducing Shareholder’s Equity of Pink Limited D. This payment would not impact the equity section of the financial statements.