Question

In: Accounting

On 1 January 2016, Jake Ltd had these equity accounts: Share Capital (50 000 shares issued...

On 1 January 2016, Jake Ltd had these equity accounts:

Share Capital (50 000 shares issued for $20 each) $1 000 000

General Reserve 200 000

Retained Earnings 600 000

During the year, the following transactions occurred:

Feb. 1 Declared an $0.80 cash dividend per share to shareholders, payable on 1 March.

Mar. 1 Paid the dividend declared in February.

July 1 Declared a 5% share dividend to shareholders, distributable on 31 July. On 1 July, the market price of the shares was $30 per share and this was determined to be the amount at which the dividend shares would be issued.

July 31 Issued the shares for the share dividend.

Dec. 1 Declared a cash dividend of $0.40 per share, payable on 5 January 2017.

Enter the beginning balances and post the entries to the equity and liability T accounts.

Solutions

Expert Solution

Share capital Additional share capital
Date Debit Date Credit Date Debit Date Credit
Jan 1. 1000000 July 1.
July 31. 50000 (50000*5%*10) 25000
0 1050000 0 25000
Bal. 1050000 Bal. 25000
General reserve Retained earnings
Date Debit Date Credit Date Debit Date Credit
Jan 1. 200000 Feb 1. Jan 1. 600000
(50000*0.80) 40000
July 1.
(50000*5%*30) 75000
Dec 1. 21000
136000 600000
Bal. 464000
Dividend payable Share dividend payable
Date Debit Date Credit Date Debit Date Credit
Mar 1. 40000 Feb 1. July 31. 50000 July 1.
(50000*0.80) 40000 (50000*5%*20) 50000
Dec 1. 21000 50000 50000
40000 61000
Bal. 21000
Note:1
Dividend payable on Dec 1:
Share capital outstanding as on Dec 1.
Nos.
Beginning balance 50000
Add: Share dividend (50000*5%) 2500
Share capital outstanding as on Dec 1. 52500
Dividend payable=52500*0.40=$ 21000

ekkarill92 answered 2 years ago
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