Question 1

The following data relates to ABC Ltd:

  • Profit for the year ended 30 June 20X1, $500,000.
  • On 31 March 20X1, the directors decided to pay an interim cash dividend of $100,000.
  • On 7 April 20X1, the interim dividend was paid.
  • For final dividends, the company’s constitution provides that the directors can recommend a dividend to be subsequently declared by a resolution of the members in a general meeting.
  • The directors recommended a final dividend of $250,000 to be paid.
  • The shareholders accepted the final dividend at the annual general meeting, and payment was made on 14 September 20X1.

Required:

  1. Prepare journal entries to record the above dividend payments.
  2. Prepare the retained profits general ledger account.

 

Question 2

Adelaide Briton Ltd issued a prospectus on 1 June 20X1 inviting applicants for 3,000 debentures of face amount $2,000, payable in full on application. Terms were 12% p.a. interest, payable annually, with a maturity date of 30 June 20X4. Exactly the right amount of applications were received by 30 June 20X1.

Required:

  1. Prepare general journal entries to record the issue of debentures.
  2. Prepare general journal entries to record the payments of interest and the repayment of principal.
  3. Prepare ledger entries to record (a) and (b) above.

 

Question 3

Swan River Ltd purchased a parcel of assets and liabilities comprising a business directly from Lyneham Pty Ltd. The parcel, measured at net fair values, consisted of:

Balance of Accounts:

Plant

Land

Vehicles

Accounts receivable

Accounts payable

Total

50,000

80,000

40,000

10,000

(16,000)

164,000

 

Required:

Prepare journal entries to record the acquisition by Swan River Ltd, assuming that:

  1. The cost of acquisition was $200,000 cash.
  2. The cost of acquisition was $144,000 cash.
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