Solutions Tovfinancial Accounting

2 social club Operations Tutorial Solutions Chapter 3 go with operations Review Questions 11. When do dividends become a legal debt of the participation? When are they to be prize as liabilities? Where a association has a genius that provides for passors 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 willing only arise when the time for remuneration of the dividend arrives.However, a dividend de preconditionined or in public recommended by the time of completion of the fiscal report but not on or before the reporting construe must not be recognised as a liability as at the reporting date. Instead such a dividend must be bring out in notes as an event subsequently reporting date. See sections 3. 4. 1 and 3. 4. 2 of the chapter. 14. Discuss the nature of a reserve. What reasons whitethorn there be for no definitions universe given for a reserve in the legislation, accounting standards and the Conceptual Framework 2010?The term reserve is not delineate 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 clams, the most frequent type of reserves are commonplace, followup and foreign currency translation reserves, either of which can be considered as direct adjustments to equity. There appears to be no clear reason as to wherefore the term reserve is not defined in the legislation, standards, or the Conceptual Framework. retained earnings is one category of reserves, match to AASB 101. Selected solution from Leo, K. , Hoggett, J. , and Sweeting, J. , (2012) Solutions manual to go after Company Accounting 9e, lavatory Wiley and Sons, Australia. Practice Questions wonder 3. 1 1. retained simoleons/interim Dividend specie (Payment of interim dividend) well-kept pelf/ Dividend Declared Divi dend collectible (Declaration of a final dividend) Revaluation Surplus oecumenic moderate (Transfer from revaluation surplus to general reserve) Retained Earnings/ Tfer to keepGeneral Reserve (Transfer to general reserve) General Reserve percentage crown (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 cxx 000 120 000 5. Dr Cr three hundred 000 300 000 QUESTION 3. 10 GERALDTON WAX LTD General journal 2013 Sept 15 Dividend account payable medium Dividend Payable resource notes (Payment of ordinary dividend 400 000 x 16c +300 000 x 16c x 3/5 = $92 800 and discernment 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 Accounting 8e, John Wiley and Sons, Australia. 2 Oct 20 region detonator Preference Retained Earnings/ buyback reward (75 000 x 5%) Shareholders Red emption (Redemption of orientation course plows out of profits) Note dividends do not accrue on the preference shares Retained Earnings/Transfer to Share chief city Share groovy ordinary (Retained earnings transferred to capital.NOTE no dividends will be nonrecreational on this share capital) Oct 25 Shareholders Redemption Cash (Payment of cash to redeem preference shares) Nov 30 Cash Share chapiter 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 0 00 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 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 forego Shares Liability (Forfeiture of 15 000 Ordinary B shares) 26 Cash Forfeited Shares Liability Share Capital Ordinary B (Reissue of 15 000 shares remunerative 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 30 000 12 000 18 000 Dr Dr Cr 27 000 3 000 30 000 Dr Cr 15 000 15 000 Dr Cr clxx 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