Homework Answers
| South Water Ltd | |
| Balance Sheet (Partial) | |
| As of June 30, 2018 | |
| Stockholders Equity | |
| Share Capital | 1,500,000 |
| Retained Earnings | 275,000 |
| Total Stockholders Equity | 1,775,000 |
Workings
| South Water Ltd | |
| Statement of Retained Earnings | |
| For Year Ended June 30, 2018 | |
| Retained Earnings, July 1, 2017 | 500,000 |
| Add: Net income | 600,000 |
| Less: Dividends | (825,000) |
| Retained Earnings, June 30, 2018 | 275,000 |
| South Water Ltd | - | |||
| Date | Account | Debit | Credit | Calculation |
| 31-Dec-17 | Dividends | 375,000 | =1,500,000*0.25 | |
| Dividends Payable | 375,000 | |||
| 31-Jan-18 | Dividends Payable | 375,000 | ||
| Cash | 375,000 | |||
| 31-May-18 | No Entry for Stock Split | |||
| Total Value remains same, but Par value per share changes from $1 to $0.33 | ||||
| 30-Jun-18 | Dividends | 450,000 | Workings below | |
| Dividends Payable | 450,000 | |||
| 30-Jun-18 | Income Summary | 600,000 | ||
| Retained Earnings | 600,000 | |||
| 30-Jun-18 | Retained Earnings | 825,000 | ||
| Dividends | 825,000 | |||
| Workings | ||||
| Dividends | ||||
| Opening Shares | 1,500,000 | |||
| Stock Split - 2 for 1 | 3,000,000 | =1,500,000*2 | ||
| Number of Common Shares Issued & O/s | 4,500,000 | |||
| Dividend per share | 0.10 | |||
| Dividends | 450,000 | =4,500,000*0.10 | ||
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