Question

EPPD1O33 QUESTION 2 (20 MARKS) Intan Sahara found the EPPDI033 is undergoing industrial training in an accounting firm. She was ng indistriNasininginanmerestforehe year? iatements or th an accounting firm. She was assigned to Covporation In the process of her work, she the followiny Apr 4Iss s related to ownership interest for the year 2011 sued 10,000 units of cumulative-Preference Share, 5% for the purpose of auring a parcel of land According to an independent valuer, the lana n harket value of RM60,000 Marker value of Nasuha Corporation's s this date is not known Apr 7 Issued 5.000 units of cumulative Preference Share, s%for cash at Apr 10Isued 50,000 units of Common Shares for cash at RM May 30 Declared RM40,000 cash divide nd to Preference 1.60 per share. and Common shar eholders. vidend will be paid in June 2011. There was no dividend declared in 2010, although dividends were declared and paid for the previous Jun 30 Paid dividends in cash Announced a 2 for I stock split for ordinary shares. Market price of the shares on this date is RMI.50 per share Oct 1 | The Company declared a 10% stock dividend to ordinary shareholders on record as at October 1, 2011. The market price of ordinary shares on the date of declaration is RMO.80 per share Nov Allocate stock dividend to ordinary shareholders. She also found the balances in the equity accounts of Nasuha Corporation as at December 3I, 2010 as follows: RM Cumulative Preference Share, 5%, par value RM5 per share, 20,000 units Ordinary Share, par value RMI per share, 200,000 units Preference Share Premium Ordinary Share Premium Retained Earnings 200,000 80,000 120,000 Nasuha Corporation is authorized to issue 60,000 units Cumulative Preference Share, 5%, with par value of RMS per share and 600,000 units Ordinary Share, par value RM1 per share. Net income for the year ended December 31, 2011 is RM100,000. Required a) Prepare the journal entries to record the above transactions. (10 marks)

Answer 1

75 76 13750 26250 30-Jun Dividend Payable to Preference share Dividend Payable to Ordinary share Cash To record dividend paid) 79 80 81 82 83 84 85 86 87 1-Jul No Journal entry required for Stock split, the par value will become half 1-Oct Retained Earnings (200000+50000)*2*10%*.80 Ordinary Share Dividend Distributable Ordinary Share Premium 25000 15000 (200000+50000)*2*10%*.50 (200000+50000)*2*10%*.30 (Declared a 15% stock dividend) 1-Nov Ordinary Share Dividend Distributable Ordinary Share 89 90 91 b) 92 93 94 95 96 97 98 To record allocation of stock dividend) Total amount available for Dividend Dividend to Peferred Stock; Cumulative From Prior Year s (100000*5%) Current Year( 175000*5%) Total Cumulative Preferred Stock dividends Amount available for Ordinary Share (40000-13750) 8750 13750 26250