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Prepare general journal entries to record the following unrelated transactions of a limited company: Payment of...

Prepare general journal entries to record the following unrelated transactions of a limited company:

  • Payment of an interim dividend of $400,000 (in cash).
  • Declaration of a final dividend of $840,000.
  • Transfer of $240,000 to the general reserve from retained earnings.
  • Payment of 600,000 bonus shares, fully paid at $1 per share from a general reserve.
  • Issued 500,000 shares for $30,000,000 by a private placement.

Solutions

Expert Solution

Payment of an interim dividend of $400,000 (in cash):- Cash balance will reduce on payament of dividend. Payable liability recognised on declaration now paid.

Declaration of a final dividend of $840,000.:- New dividend liability created. Dividend is adjusted from retained earnings.

Transfer of $240,000 to the general reserve from retained earnings.:- Retaiend earnings balance reduced and General reserve balance increased

Payment of 600,000 bonus shares, fully paid at $1 per share from a general reserve.:- Bonus shares are common stock once issued. The same is adjusted from General reserve.

Issued 500,000 shares for $30,000,000 by a private placement.:- Cash is received on issue of shares. Common stock is increased on issue.

ekkarill92 answered 2 years ago
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