Question

At the beginning of 2013, Greene Limited showed the following amounts in equity section of its statement of financial position: problem 12.6B probleholders' equity section of 2013. Green owing amounts in Red Shareholders' equity: Tre ar value. 1,000,000 shares authorized, sutstanding ..... . .......... LOG Share capital, si 30.000 issued and outstanding * Share premium: share capital Total issued and paid capital Retained earnings Total shareholders' equity ... $ 560,000 4.480.000 $5,040,000 3.000.000 $8,040,000 relating to shareholders' equity during the year are as follows: The transactions relating Declared a dividend of $1 per share to shareholders of record on 31 January, payable 5 Jan. on 18 February Paid the cash dividend declared on 5 January, The company purchased 1,000 of its own shares at a price of $10 per share. May Reissued 500 of the treasury shares at a price of $12 per share. slune Declared a 5 percent stock dividend to shareholders of record at 22 June, to be distributed on 30 June. The market price of the share at 15 June was Sll per share. (The 500 shares remaining in the treasury do not participate in the stock dividend.) 30 June Distributed the stock dividend declared on 15 June. 12 Aug. Reissued 300 of the 500 remaining treasury shares at a price of $9.75 per share. 31 Dec. The Income Summary account, showing profit for the year of $1,750,000, was closed2 into the Retained Earnings account. 31 Dec. The $560,000 balance in the Dividends account was closed into the Retained Earnings account. ohon Instructions C Compute the maxim 2013, without impairing the earnings for dividends Prepare in general journal form the entries to record the above transactions repare the shareholders' equity section of the statement of financial position at 31 December Use the format illustrated in Exhibit 12-6. Include a supporting schedule showing your computation of retained earnings at that date. e maximum cash dividend per share that legally could be declared at 31 December limpairing the paid capital of Greene Limited (Hint: The availability of retained of dividends is restricted by the cost of treasury shares owned.) Problem 12.7B below are five events in Declared a $5 per Hot W Hot Water Limited manufactures a variety of dry cleaning equipment. Listed events that occurred during the current year: 3 Peclared a $5 per share cash dividend. 1. Pred te and the cash dividend dolo

Answer 1

a. In the books of Greene Limited:

Date	Account Titles	Debit	Credit
		$	$
5 Jan	Dividends	560,000
	Dividends Payable		560,000
18 Feb	Dividends Payable	560,000
	Cash		560,000
20 Apr	Treasury Stock	10,000
	Cash		10,000
25 May	Cash	6,000
	Treasury Stock		5,000
	Paid-in Capital: Treasury Stock		1,000
15 June	Retained Earnings ( 559,500 x 5 % x $ 11 )	307,725
	Common Stock Dividend Distributable		27,975
	Share Premium : Share Capital		279,750
30 June	Common Stock Dividend Distributable	27,975
	Common Stock		27,975
12 Aug	Cash	2,925
	Paid-in Capital : Treasury Stock	75
	Treasury Stock		3,000
31 Dec	Income Summary	1,750,000
	Retained Earnings		1,750,000
31 Dec	Retained Earnings	560,000
	Dividends		560,000

b.

Greene Limited Balance Sheet ( Partial ) December 31, 2013
Shareholders' Equity
Share Capital, $ 1 par value, 1,000,000 shares, 587,975 issued	$ 587,975
Share premium: share capital	4,759,750
Paid-in Capital : Treasury Stock	925
Total Issued and paid capital	5,348,650
Retained Earnings	3,882,275
Less: Treasury Shares ( at cost )	( 2,000 )
Total Shareholders Equity	3,880,275