Solutions Tovfinancial Accounting

2 Company Operations tutorial Solutions Chapter 3 Company operations go off Questions 11. When do dividends become a heavy debt of the company? When ar they to be treasure as liabilities? Where a company has a constitution that provides for directors to declare a dividend, consequently a dividend becomes a debt of the company sourcely the dividend is declared. Where no such statement exists in a companys constitution, then(prenominal) the debt will only arise when the sequence for payment of the dividend arrives.However, a dividend determined or publicly recommended by the time of period of the financial report but not on or before the coverage date must not be recognised as a liability as at the reporting date. sort of such a dividend must be disclosed in notes as an font after reporting date. See sections 3. 4. 1 and 3. 4. 2 of the chapter. 14. Discuss the nature of a curb. What reasons may there be for no definitions being given for a reserve in the legislation, acc ounting touchstones and the conceptual poser 2010?The term reserve is not specify in any accounting standard or the Corporations Act. AASB 101 describes the equity of a company as consisting of issued capital and militia (para. 54(r)). In addition to retained earnings, the near common type of reserves are oecumenical, revaluation and foreign currency edition reserves, all of which can be considered as direct adjustments to equity. There appears to be no clear reason as to why the term reserve is not defined in the legislation, standards, or the Conceptual Framework. retain earnings is one phratry of reserves, according to AASB 101. Selected solving from Leo, K. , Hoggett, J. , and Sweeting, J. , (2012) Solutions manual(a) to observe Company report 9e, posterior Wiley and Sons, Australia. charge Questions QUESTION 3. 1 1. kept up(p) net/Interim Dividend currency (Payment of interim dividend) Retained Earnings/ Dividend state Dividend Payable (Declaration of a final dividend) Revaluation Surplus customary substitute (Transfer from revaluation surplus to prevalent reserve) Retained Earnings/ Tfer to Reserve universal Reserve (Transfer to general reserve) General Reserve contribution expectant (Being bonus dividend out 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 three hundred 000 QUESTION 3. 10 GERALDTON arise LTD General journal 2013 Sept 15 Dividend Payable indifferent Dividend Payable orientation course funds (Payment of ordinary dividend 400 000 x 16c + three hundred 000 x 16c x 3/5 = $92 800 and gustation dividend $75 000 x 6%) Dr Dr Cr 92 800 4 500 97 300Selected solution from Leo, K. , Hoggett, J. , Sweeting, J. , and Radford, J. , (2009) Solutions manual to construe with Company Accounting 8e, John Wiley and Sons, Australia. 2 Oct 20 handle keen Preference Retained Earnings/ salvation Premium (75 000 x 5%) destinyholders repurchase (Rede mption of preference shares out of profits) Note dividends do not accrue on the preference shares Retained Earnings/Transfer to get by Capital treat Capital nondescript (Retained earnings transferred to capital.NOTE no dividends will be paid on this share capital) Oct 25 Shareholders Redemption Cash (Payment of cash to keep open preference shares) Nov 30 Cash Share Capital modal(a) 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 21 000 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 gripe Ordinary B Share Capital Ordinary B prefigure of 80c per share on Ordinary B shares) Calls in further (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 C r 16 000 16 000 Dr Cr Dr Cr Cr 212 000 212 000 30 000 12 000 18 000 Dr Dr Cr 27 000 3 000 30 000 Dr Cr 15 000 15 000 Dr Cr one hundred seventy 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