Exercise 9.13

Dividends, reserves, retained earnings

During the year ended 30 June 2019, the directors of Jindabyne Ltd declared and paid an interim dividend of $18 000 out of retained earnings. At the end of the year the financial statements showed a profit (before tax) of $460 000 out of which the directors made the following reserve transfers and tax liability.

Income tax expense $140000

Reserves:

Plant Replacement $40000

General $102000

The beginning balance of retained earnings was $15 000.

Required

1. Prepare journal entries relating to the above transactions.
2. Prepare the Retained Earnings account for Jindabyne Ltd for the year ended 30 June 2019.