Solutions Tovfinancial Accounting

2 Company Operations Tutorial Solutions Chapter 3 Company operations Review Questions 11. When do dividends become a healthy debt of the confederacy? When are they to be recognize as liabilities? Where a company has a constitution that provides for directors to declare a dividend, then a dividend becomes a debt of the company once the dividend is declared. Where no such statement exists in a companys constitution, then the debt will only arise when the m for payment of the dividend arrives.However, a dividend de marchesined or publicly recommended by the fourth dimension of completion of the financial report but not on or before the reporting date must not be recognised as a liability as at the reporting date. sooner such a dividend must be disclosed in notes as an event after reporting date. See sections 3. 4. 1 and 3. 4. 2 of the chapter. 14. contend the nature of a have. What reasons may there be for no definitions world given for a reserve in the legislation, explanatio n standards and the Conceptual manakin 2010?The term reserve is not defined in any accounting standard or the Corporations Act. AASB 101 describes the equity of a company as consisting of issued capital and reserves (para. 54(r)). In addition to retained earnings, the most parkland type of reserves are general, revaluation and foreign currency comment reserves, all of which can be considered as direct adjustments to equity. at that place appears to be no clear reason as to why the term reserve is not defined in the legislation, standards, or the Conceptual Framework. bear earnings is one category of reserves, according to AASB 101. Selected solution from Leo, K. , Hoggett, J. , and Sweeting, J. , (2012) Solutions manual to go along Company method of accounting 9e, canful Wiley and Sons, Australia. Practice Questions QUESTION 3. 1 1. retained moolah/Interim Dividend hard cash (Payment of interim dividend) maintained moolah/ Dividend declare Dividend Payable (Declaration of a final dividend) Revaluation Surplus General confine (Transfer from revaluation surplus to general reserve) Retained Earnings/ Tfer to timidityGeneral Reserve (Transfer to general reserve) General Reserve Share slap-up (Being bonus dividend come forth(a) of general reserve) Dr Cr 200 000 200 000 2. Dr Cr 420 000 420 000 3. Dr Cr 65 000 65 000 4. Dr Cr 120 000 120 000 5. Dr Cr ccc 000 300 000 QUESTION 3. 10 GERALDTON WAX LTD General journal 2013 Sept 15 Dividend Payable mine run Dividend Payable Preference Cash (Payment of ordinary dividend 400 000 x 16c +300 000 x 16c x 3/5 = $92 800 and election dividend $75 000 x 6%) Dr Dr Cr 92 800 4 calciferol 97 300Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to accompany Company be 8e, John Wiley and Sons, Australia. 2 Oct 20 Share bully Preference Retained Earnings/Redemption Premium (75 000 x 5%) Shareholders Redemption (Redemption of preference divides out of profits ) Note dividends do not accrue on the preference shares Retained Earnings/Transfer to Share upper-case letter Share Capital mediocre (Retained earnings transferred to capital.NOTE no dividends will be paid on this share capital) Oct 25 Shareholders Redemption Cash (Payment of cash to redeem preference shares) Nov 30 Cash Share Capital Ordinary A (Renounceable rights issue) 400 000/5 = 80 000 x 1. 90 Dec 20 Share Issue Costs (Share Capital) Cash (Payment of share issue costs) 2014 Jan 10 Retained Earnings/Transfer to reserve General Reserve (Transfer to general reserve) Feb 28 Cash Share Capital Ordinary C (Issue of shares to options holders) 70 000 x $1. 0 Share Options Share Capital Ord C Lapsed Options Reserve (Transfer of options account, 35 000 exercised and 5 000 lapsed) 70 000/2 = 35 000 x 60c = 21 000 Dr Dr Cr 75 000 3 750 78 750 Dr Cr 75 000 75 000 Dr Cr 78 750 78,750 Dr Cr 152 000 152 000 Dr Cr 3 000 3 000 Dr Cr 35 000 35 000 Dr Cr 126 000 126 000 Dr Cr Cr 24 000 21 0 00 3 000 Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to accompany Company Accounting 8e, John Wiley and Sons, Australia. April 30 Call Ordinary B Share Capital Ordinary B Call of 80c per share on Ordinary B shares) Calls in Advance (20 000 x 80c) Call Ord B (Transfer of calls in advance) may 31 Cash Call Ord B (Cash received on call) (300 000 20 000 15 000) x 80c June 18 Share Capital Ordinary B Call Ordinary B Forfeited Shares Liability (Forfeiture of 15 000 Ordinary B shares) 26 Cash Forfeited Shares Liability Share Capital Ordinary B (Reissue of 15 000 shares paid to $2 for payment of $1. 0) 27 Forfeited Shares Liability Cash (Refund to former shareholders) June 28 Retained Earnings/Dividend Declared Dividend Payable (Dividend declared) Workings from the entries above 400 000 + 300 000 + 80 000 + 70 000 15 000 + 15 000= 850 000 x 20c Dr Cr 240 000 240 000 Dr Cr 16 000 16 000 Dr Cr Dr Cr Cr 212 000 212 000 30 0 00 12 000 18 000 Dr Dr Cr 27 000 3 000 30 000 Dr Cr 15 000 15 000 Dr Cr 170 000 170 000 Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to accompany Company Accounting 8e, John Wiley and Sons, Australia. 4