ACCOUNTING METHOD ASSIGNMENT STAGE 1 25 marks Glacier Holdings Led (GHL) is a public company and was incorporated a number of years ago and has been very successful. The equity section of the balance sheet of the company at the 30th June 20X1 is provided below: OWNERS' EQUITY Issued Capital 85,000,000 Reserves 39,952,000 Retained profits 13,675,400 TOTAL OWNERS' EQUITY 138,627,400 The company's financial year ends on 30th June. Additional Information: 1. Issued capital is comprised of: 12,000,000 ordinary shares all issued at $5.00 each . $25,000,000 of 69%pa preference shares. Dividends on these shares are paid annually on the last day of August. A list of ordinary shareholders and their holdings as at 30th June 20X1 is provided on the next page. (Ensure that you have fully read and understood the information previously provided under the Basic Details for the assignment.)Shares at Family name/Corporate name First Name 30/6/20X1 Smith Deeanna 30,000 Johnson Pty Ltd 1,560,000 Williams Ruthanne 25,000 Jones Nadine 15,000 Brown Ltd 122,000 Davis Jessie 12,500 Miller Trust Fund 438,000 Wilson Gilma 111,000 Moore Reiko 87.500 Taylor Nathaniel 176,000 Anderson Serafina 15,000 Thomas Matt 24,500 Jackson International Fund 3,250,000 White Rueben 10,000 Harris Shirley 33,500 Martin Zoe 76,000 Thompson Deane 58,900 Garcia Pty Ltd 978,000 Martinez Gonzalo 32,200 Robinson Art 19,900 Clark Hermelinda 66,600 Rodriguez Edward 48,000 Lewis Kurt 9,400 Lee Shanti 15,000 Walker Wendy 23,200 | Hall Evelia 9,000 Allen Romana 21,300 Young Ltd 750,000 Hernandez Quinton 14,000 King Jeannette 5,000 Wright Herta $4,500 Lopez Stephanie 15,400 Hill Mavis 28,000 Scott Meri 29,800 Green Sheldon 10,000 Adams Samantha 25,000 Baker Forest 18,600 Gonzalez Garfield ,200 Nelson Waterloo Pty Ltd 1,000,000 Carter Petrina 12,400 Mitchell Penelope 59,000 Perez Eleonore 86,700 Roberts Yvette 67,800 Turner Craig 39,500 Phillips Nedra 28,800 Campbell Superannuateon Ltd 1,600,000 Parker Ignatius 345,000 Evans Ken 65,000 2 Edwards Cassandra 28,800 Collins Janet 100,000During the 2W1 year Shareholders ware given 'ae ionizincirlllnilzjir to parcipate in the dividend reinvestment plan introduced by {iHL Under this plan shareholders would receive ordinary shares in lieu of cash for dividends. Shareholders must agree that their entire holding is subject to the UHF plan. Shares are issued at 95% of the closing AEK share price on the day in which the dividend is declared. It is likely that the calculation of the number of shares under the DHP plan will result in a part share {ie not a whole number]. in that event the number of shares will be rounded down to the neat whole number. For example, a calculation which results in 1234533 shares will be rounded down to 12345. IIi'il'heneverthe rounding occurs that rounded down number will be used as the basis for future transactions and calculations. The following shareholders agreed to have their shareholding be subject to the DEF plan: Johnson * Ltd __ _m _ _m _ _ _ _m __ _m m _ Im __ _::_ On the 15th June 20X1 the company determined a final dividend of 4.0 cents per ordinary share. This was declared on the 15th July 20X1 and paid the day after the annual general meeting which was held on the 14th September 20X1. The following are a selection of ASX closing daily share prices for GHL Date Closing Share Closing Share Price $ Date Price $ 30/4/X1 $5.00 31/7/X1 $5.28 15/5/X1 $5.08 15/8/X1 $5.22 31/5/X1 $5.26 31/8/X1 $5.18 15/6/X1 $5.28 14/9/X1 $5.38 30/6/X1 $5.23 30/9/X1 $5.30 15/7/X1 $5.20 14/10/X1 $5.29 REQUIREMENTS FOR STAGE 1 1. Prepare all the general journal entries for all transactions that result from the information above for Glacier Holdings Ltd. for the period 1" July 20X1 to 15th September 20X1. Where there is a calculation you should provide a working paper and your journal narration can refer to the working paper for details. 18 marks 2 . Provide a list of ordinary shareholders and the number of shares they each hold after the payment of the final dividend on 15th September 20X1. Also clearly state the following: . The number of ordinary shares on issue subject to the dividend reinvestment plan. . The number of ordinary shares on issue which are not subject to the dividend reinvestment plan. . The total number of ordinary shares on issue. 7 marksSTAGE 2 60 marks Stage 2 follows from the transactions and solutions from Stage 1. You should ensure that you have examined your solutions from Stage 1 and compared them to the suggested solution in MyUni, understood any differences and re-set (if necessary) any of your numbers. The matters which need to be addressed in Stage 2 are more complex than Stage 1 and some transactions lead into subsequent transactions. It is imperative that you take your time with these and make sure that you fully appreciate the implications and the resulting general journal entries. Accuracy of calculations and the numbers that follow is vitally important. It needs to be kept in mind that these matters deal with shareholders - that is, parties external to the company. This means, for example, that if a dividend is paid and shares issued as a result and it is later found that there is an error - then the shareholders will need to be advised, the corrections made to the dividend and the shares issued altered. In reality this would be extremely time consuming, expensive and embarrassing. Consequently, care needs to be taken so that calculations and numbers which flow through to subsequent matters are complete and correct. Any errors, and their flow through effects, will affect marks severely. The following are matters which occurred from Glacier Holdings Itd (GCL). 1. On the 30th October 20X1 the Board of Directors decided to offer ordinary shareholders a 1:10 rights issue. Shareholders who accept the offer pay 90% of the share price on the day of the Board decision. Acceptance and payment byshareholders needs to be made on the 16th December 20X1. The following shareholders took up the offer and paid the appropriate amounts on the required date: Johnson Pty Ltd Williams Ruthanne Jones Nadine Davis Jessie Wilson Gilma Thomas Matt Martin Zoe Thompson Deane Martinez Gonzalo Walker Wendy Allen Romana Young Ltd King Jeannette Wright Herta Scott Mer Green Sheldon Baker Forest Nelson Waterloo Pty Ltd Turner Craig Phillips Nedra Parker Ignatius Evans Ken Edwards Cassandra Collins Janet Brown Ltd Taylor Nathaniel Jackson International Fund Harris Shirley Garcia Pty Ltd Clark Hermelinda Rodriguez Edward Lewis Kurt Lee Shanti Hall Evelia Hernandez Quinton Lopez Stephanie Hill Mavis Adams Samantha Roberts Yvette Campbell Superannuateon Ltd2. An interim dividend of 5 cents per ordinary share was declared and paid on the 10th March 20X2. (Please refer to the Stage 1 information for DRP details.) 3. On the 18th June 20X2 the company determined a final dividend for the financial year of 5.5 cents per ordinary share. This was declared on the 20th July 20X2. The following are a selection of ASX daily closing share prices for GHL Date Closing Share Closing Share Price $ Date Price $ 14/10/X1 $5.29 31/3/X2 $5.43 30/10/X1 $5.36 10/4/X2 $5.53 16/11/X1 $5.41 30/4/X2 $5.51 30/11/X1 $5.40 15/5/X2 $5.60 16/12/X1 $5.33 31/5/X2 $5.54 31/12/X1 $5.31 18/6/X2 $5.48 12/1/X2 $5.27 30/6/X2 $5.68 31/1/X2 $5.18 11/7/X2 $5.70 12/2/X2 $5.29 20/7/X2 $5.75 28/2/X2 $5.35 31/7/X2 $5.68 10/3/X2 $5.40 20/8/X2 $5.69REQUIREMENTS FOR STAGE 2 1 . You are required to consider the three (3) different matters and subsequent transactions which are presented above and provide the following in this order: Prepare a working paper for the rights share issue and the subsequent general journal entry. Round amounts for the entry to the nearest dollar. Prepare a working paper identifying the total number of ordinary shares on issue after the rights issue and those that are subject to the DRP and those that are not. Prepare a working paper for the interim dividend and the subsequent general journal entry. Prepare a working paper identifying the total number of ordinary shares on issue after the payment of the interim dividend and those that are subject to the DRP and those that are not. Prepare a working paper for the final dividend and the subsequent general journal entry. (NB there is no need to do a journal for the payment of the dividend.) 40 marks 2. Assume the final dividend declared on 20th July 20X2 was paid at a later date. Provide a list of ordinary shareholders and the number of shares they each hold after the payment of the final dividend. Also clearly state the following: The number of ordinary shares on issue subject to the dividend reinvestment plan. The number of ordinary shares on issue which are not subject to the dividend reinvestment plan. . The total number of ordinary shares on issue. 10 marks 3. Prepare the general ledger T account for Ordinary Share Capital for the period 1/7/20X1 to 1/7/20X2 (this incorporates both Stage 1 and Stage 2). Ensure it is properly balanced at 30/6/20X2. 10 marks NB The order of issues to be addressed in 1. above is designed to help students consider them in the appropriate sequence