Note 1: Issue of ordinary shares – 30,000 shares x $5.00 = $150,000 Double entry: Debit Bank Account $150,000 Credit Ordinary shares Account $150,000 Note 2: Loan interest – 16% x $100,000 = $16,000 Double entry: Debit Loan Interest expense Account $16,000 Credit Bank Account $16,000 Preference dividends – 10% x $80,000 = $8,000. Double entry: Debit Bank Account $8,000 Credit Dividends paid Account $8,000 Ordinary dividends – 40¢ x{ [$200,000/$5] + 30,000 shares} = 40¢ x 70,000 shares = $28,000 Double entry: Debit Dividends paid $28,000 Credit Bank Account $28,000 Note 3:
Note 4: Adjustment on operating expenses for accrued operating expenses= $360,000 + $10,000 = $370,000. The $370,000 is for the Statement of Comprehensive Income and the $10,000 will fall under the Current Liabilities section of the Statement of Financial Position. Note 5: Corporation Tax expense = 30% x $74,300** = $22,290. ** See calculation of profit before tax (PBT) in the Income Statement. Note 6: The bank loan will fall under the Non Current Liabilities section of the Statement of Financial Position. Lastly, before the Statement of Comprehensive Income and the Statement of Financial Position can be prepared the Bank account's balance needs to be adjusted for the transactions recorded in Note 1 and Note 2, since both notes clearly state that these transactions were not reflected in the trial balance presented. Now that all of the additional information has been accounted for the Statement of Comprehensive Income can be prepared. Now that the Statement of Comprehensive Income has been completed the Statement of Financial Position can be prepared. I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to comment below. Best of luck!
13 Comments
1/18/2019 07:45:59 pm
Hi Kathrina!
Reply
Alisha
2/17/2019 06:34:12 pm
Very Useful !!!!! ♡
Reply
Sarah
2/25/2019 07:23:17 pm
Why was bank overdraft omitted and where did the figure for bank come from
Reply
Accounting Lyceum
4/6/2019 07:29:09 am
Hi Sarah,
Reply
Aliyah Davy
3/3/2019 12:00:02 pm
why is bank overdraft not listed in the current liabilities section?
Reply
Accounting Lyceum
4/6/2019 07:35:11 am
Hi Aliyah,
Reply
Evelyn
4/27/2019 06:57:24 pm
Hi, thank you so much for this but I'm a bit confused about a few things:
Reply
Accounting Lyceum
5/2/2019 09:08:30 pm
Hi Evelyn!
Reply
Evelyn
5/3/2019 03:16:42 am
Thank you so much for all of your help, I really appreciate it! ❤️
Krystal
5/5/2019 11:11:46 am
You are most welcome Evelyn!
Reply
kimberley
5/23/2019 09:01:05 pm
where did you get $74 300 as a figure to calculate the corporation tax
Reply
Krystal
11/28/2019 05:37:13 pm
Hi Kimberley!
Reply
Your comment will be posted after it is approved.
Leave a Reply. |
AuthorThe author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor. Archives
May 2018
Categories
All
|