Question

Refrence

Deegan. (2016). Financial Accounting . McGraw-Hill Education, Australi

On 1 January 2019, Rake Ltd had equity accounts as follows. Share capital (60 000 shares issued for $30 each) General reserve Retained earnings $1 800 000 250 000 900 000 During the year, the following transactions occurred. Feb. 1 Mar. 1 July 1 Declared a $0.60 cash dividend per share to shareholders, payable on 1 March. Paid the dividend declared in February. Declared a 10% share dividend to shareholders, distributable on 31 July. On 1 July the market price of the shares was $40 per share and this was determined to be the amount at which the dividend shares would be issued. Issued the shares for the share dividend. Declared a cash dividend of $0.50 per share on 15 December, payable on 5 January 2020. July 31 Dec. 1 Required a. Journalise the transactions. b. Enter the beginning balances and post the entries to the equity T accounts. C. Prepare the equity section of Rake Ltd's statement of financial position as at 31 December.

Answer 1

Question: a)	Journal Entries
	Journal entry on thae date of declaration
	Date	Journal		Debit	Credit
	Feb, 1	Retained Earnings	(60,000*0.6=36,000)	36,000
		Dividends Payable			36,000
	Journal entry on tha date of payment of dividends declared
	Date	Journal		Debit	Credit
	March, 1	Dividends Payable	(60,000*0.6=36,000)	36,000
		Cash			36,000
	Journal entry on thae date of declaration of Stock dividend
	Date	Journal		Debit	Credit
	July,1	Retained Earnings	(60,000*10%=6,000, 6000*40=2,40,000)	2,40,000
		Common Stock Dividend Distributable	(6000*30=1,80,000)		1,80,000
		Additional Paid in capital			60,000
	Journal entry on tha date of payment of dividends declared
	Date	Journal		Debit	Credit
	July,31	Common Stock Dividend Distributable		1,80,000
		Common Stock			1,80,000
	Journal entry on thae date of declaration
	Date	Journal		Debit	Credit
	Dec,15	Retained Earnings	(66,000*0.5=33,000)	33,000
		Dividends Payable			33,000
Question b). Equity account
	Debit	Credit
		Opening. Balance	60,000 shares
		Common stock as dividend issued	6000 shares
	66,000 shares		66,000 shares
Question c). Financial position as at 31, dec
	Debit	Equtiy & Liabilities	Amount
		Equity shares(66,000*30)	1,980,000
		General Reserve	2,50,000
		Retained Earnings(900000-240000-33000-36000)	591,000
		Dividend Payable	33,000
	26,04,000		26,04,000