Part A The equity section of Island Ltd as at July 1, 2020 is as follows: Share capital 2,000,000 ordinary shares, issued at $2 fully paid 6% 20,000 preference shares, issued at $3, fully paid General reserve Revaluation surplus Retained earnings $4,000,000 60,000 50,000 8,000 590,000 During the year ended June 30, 2021, the following transactions occurred: On July 1, 2020, Island Ltd issued 2,000 ordinary shares at $2 each by private placement. All new shares are entitled to interim and final dividends. (ii) Declared $0.06 per share of interim dividend to all ordinary shareholders on December 1, 2020. (ii) Payment of interim dividend to ordinary shareholders was made on February 28, 2021. (iv) Declared and paid a dividend to preference shareholders on March 31, 2021. (v) Declared final dividend of 2 cents per share to all ordinary shareholders on

Part A The equity section of Island Ltd as at July 1, 2020 is as follows: Share capital 2,000,000 ordinary shares, issued at $2 fully paid 6% 20,000 preference shares, issued at $3, fully paid General reserve Revaluation surplus Retained earnings $4,000,000 60,000 50,000 8,000 590,000 During the year ended June 30, 2021, the following transactions occurred: On July 1, 2020, Island Ltd issued 2,000 ordinary shares at $2 each by private placement. All new shares are entitled to interim and final dividends. (ii) Declared $0.06 per share of interim dividend to all ordinary shareholders on December 1, 2020. (ii) Payment of interim dividend to ordinary shareholders was made on February 28, 2021. (iv) Declared and paid a dividend to preference shareholders on March 31, 2021. (v) Declared final dividend of 2 cents per share to all ordinary shareholders on

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Part A
The equity section of Island Ltd as at July 1, 2020 is as follows:
Share capital
2,000,000 ordinary shares, issued at $2 fully paid
6% 20,000 preference shares, issued at $3, fully paid
General reserve
Revaluation surplus
Retained earnings
$4,000,000
60,000
50,000
8,000
590,000
During the year ended June 30, 2021, the following transactions occurred:
(1)
On July 1, 2020, Island Ltd issued 2,000 ordinary shares at $2 each by private
placement. All new shares are entitled to interim and final dividends.
(ii)
Declared $0.06 per share of interim dividend to all ordinary shareholders on
December 1, 2020.
(i)
Payment of interim dividend to ordinary shareholders was made on February
28, 2021.
(iv)
Declared and paid a dividend to preference shareholders on March 31, 2021.
(v)
Declared final dividend of 2 cents per share to all ordinary shareholders on
June 30, 2021.
Required:
Prepare journal entries for the above transactions. Show all workings and narrations.

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