Question
Accounting for dividends, bonus issues, share splits and buy-backs For each of the following transactions, write the journal entries and indicate the effect on a
Accounting for dividends, bonus issues, share splits and buy-backs
For each of the following transactions, write the journal entries and indicate the effect on a companys assets, liabilities or equity (ignore tax).
1) The Brewski Company declared (out of retained profits) and paid a cash dividend of $0.15 per share. The Brewski Companys share capital is $500,000 and 100,000 shares have been issued.
2) The Cider Company declared and paid a 1:5 bonus issue out of the companys revaluation surplus. The companys share capital is $500,000 (100,000 shares). The value of the revaluation surplus prior to the bonus issue was $200,000.
3) The Limata Company declared and performed a 3:1 share split. Prior to the share split, the company had 200,000 shares, and the share capital was $400,000.
4) The Caprisk Company decided to perform a share buy-back. The company paid $200,000 for 15,000 shares originally issued at $10 each.
5) Sparkles transferred $200,000 from retained profits to general reserves.
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