for an example...say a company have capital Rs.100 ......debtors rs.10, cash 100 and profit rs.10( unrealized ,lye in the form of debtors).

if company decide to distribute dividend means.. how it can be possible..
my questions are..
* if it distributes whole profit (Rs.10) as divdend , cash will be Rs.90. But what is the effect on liability side? why we should reduce capital to 90...why not eliminate that profit 10

then balance sheet figures will be cash rs 90 and debtors 10 and capital 100

*(or) if we reduce capital to 90 means .... how to treat that profit 10 ...have to add on to reserve &surplus?

please clarify me...